First, we must quickly remind ourselves of Dharmesh Kant’s recent track record in picking stocks. From the little I have seen, Dharmesh’s stock picking and timing appear to be impeccable. (I wrote a piece on it: Dharmesh Kant Scores Big With Winning Stocks). Examples of his stellar stock picks with up-to-date gains are Force Motors (123% gain in 3M), Hester Bio-Sciences (72% gain in 3.5M), MPS (102% gain in 3.5M). Other stocks like Camlin Fine Sciences and Thomas Cook have also given hefty gains.
AVT Naturals has, however, disappointed so far with a loss of 14% after its dismal Q2FY15 results. Unfortunately, Dharmesh has not issued any update about what we should do with AVT, as he is expected to do.
Anyway, Dharmesh’s latest stock pick is Camson Bio Technologies, a small cap with a market capitalisation of only Rs. 462 crore.
Dharmesh points out that Camson is a leading player in the manufacture of hybrid seeds, biocides and bio-fertilizers. Apart from a large market in India, there is also a huge international market for bio-agri products. This is brought out by the fact that in Q1FY15, Camson posted a growth of 33% on YOY basis.
What appears to have caught Dharmesh’s eye is Camson’s “aggressive expansion plans”. In an interview, he said “The company has undertaken a massive capacity expansion in the last two years and now the operating leverage of those capacity expansions will come forward in the next couple of years.”
Dharmesh has provided a lot of detail in his report. At the end, he recommends a buy on the basis that:
“Assuming the company is able to maintain present run rate of over 30% growth in Agribiotech Products and 15% on Hybrid Seeds Business on sequential basis for next couple of years and delivers annualized PAT margin of around 14% (last three years average); its FY’16 EPS works out to be Rs 12.61. Valuing the company at P/E multiple of 20x for FY’16 the target stock price comes at Rs 252.”
Dharmesh’s target price of Rs. 252 represents an upside of nearly 63% from the CMP of Rs. 154.
The point worth noting is that IndiaNivesh Securities, Dharmesh’s employer, bought a chunk of 4,50,000 shares of Camson Bio Technologies in the June 2014 quarter. They have increased the holding to 4,88,354 shares in the September 2014 quarter. The holding is worth Rs. 7.50 crore at the CMP of Rs. 154.
We saw this earlier in Hester Biosciences where IndiaNivesh has a chunk of shares in the company which is being recommended for purchase.
Now, the fact that the analysts are putting their money where their mouth is may be a good thing or a bad thing, depending on how you look at it. Ashish Chugh of Hidden Gems put it well when he pointed out that there is a paradox because “If you recommend a Stock you don’t own, YOU LACK CONVICTION. If you recommend the one you own, YOU ARE TALKING UP YOUR STOCK.”
So, now you have to decide whether you want to join Dharmesh Kant & IndiaNivesh in grabbing a chunk of Camson Bio Technologies.
Please give this a pass. Fundamentals does not boast of an investment worthy company.
Promoter holding very less.
Bangalore, September 29, 2014: – Camson Biotechnologies Limited, one of India’s leading agriculture biotechnology company with a strong R&D portfolio, today announced the demerger of seed business unit into a separate firm. The new firm would be recognised as Camson Seeds Limited. This move is in-line with the management’s vision of focussing on the core business – Biocides. This will allow both companies to operate separately and be valued independently. Also, from a regulatory perspective the businesses are very different which necessitated the move.
http://www.camsonbiotechnologies.com/pdf/Seed_Business_Demerger_29th_Sept_2014
Camson looks mainly operator driven stock. Holding longer in past, stock has thrilled investor like roller coaster.
Highly speculative company which is likely to post good numbers due to low base effect on Sept,13.
Investors should stay away and speculators should rush here.
Hi Arun,
To substantiate your comments I furnish the following information.
The promoters stake is too low at just around 25%
Slew of recommendations coming from all quarters during March / April 2015 from Karvy, Prakash Diwan and so on. Now that the price has halved no updates from any of them including Dharmesh.
Company has been talking about demerger of seeds business for quite a long time which is yet to happen.
On a slew of lower circuit filters for the last few days.
Any further updates from your side?
very true remain away from such stocks camson india nivesh only interested in dumping it on you
At the time when it was recommended it was trading at rs 154 , Its at rs 100 now , is it wotth Investing with a time frame of 1-2 years…..