Posts in category Value Pickr
Tata Motors – DVR (01-09-2022)
Noted that the Month on Month sales has dipped for the first time in a long time.
The ICE sales is at 43,321 as against 43,483 during July and EV at 3,845 as against 4,022 last month. YoY sales growth continues to be robust.
AJ
Disclosure: Remian invested from lower levels.
Ramana’s Portfolio – Feedback most welcome! (01-09-2022)
It’s mostly my gut feeling jokes apart
The Portfolio has a good combination of Large cap heavy weights + Growing Mid Cap (DN ,Vinati,DF, Devyani) & a small caps like fairchem,yasho. Thing to note here is almost 1/3 of the PF is relying on chemicals.
MCX and Financial Technologies (01-09-2022)
Once the tech transition to TCS is completed which is to be done by q3fy23 the Depreciation will increase but software charge will reduce. Combinely there will be some cost saving on depreciation+software charges But the main part is there won’t be any charges on the revenue which 63 moons is charging as of now. So once the tech transition happens and as revenue increases based on Options volume increase operating leverage will play out.
MCX and Financial Technologies (01-09-2022)
Company told exchanges that everything regarding the tech transition is shared with investors in concall. There is nothing else to be shared.
IMO mcx management is very transparent. They upload transcripts of analyst meets also. I haven’t seen any company doing that. Sometimes such media reports are speculative in nature.
On the business front Volume of Options is increasing month over month rapidly while Futures volume is constant more or less.
On technical charts 1275 seems to be a good support for short term.
Disclosure: Invested and biased.
Zomato – Should you order? (01-09-2022)
Better to invest in infoedge which has significant stake in both zomato and dotpe…
CAMS – Indirect Bet on Financialization? (01-09-2022)
PE investors have an obligation to their fund investors and hence they exit from their investments frequently. This business has a very long runway for growth. Our total public savings penetration in the equity markets is the lowest as compared to other economies. i am accumulating this stock.
Patanjali Foods – may be a big winner in the long term (01-09-2022)
Patanjali Foods Ltd - 5 Business Verticals
EDIBLE OIL - One of the largest edible oil refining company in India Brands across mass, value & premium segment Key Brands: Ruchi Gold, Mahakosh, Sunrich, Ruchi Star, Nutrela Vegetable Oil Crude Oil Refined Vegetable Oil Fats Vanaspati Bakery By-Products & Derivatives Crushing Refining
FOODS BUSINESS - Soya Flour & TSP(2) B. Noodles & Breakfast cereals, Biscuits, Cookies and Rusks C. Newy acquired food division of Patanjali Ayurveda Limited
NUTRACEUTICALS -Forayed into the Nutraceuticals and Wellness segment in the first quarter of FY2022. Co-branded under Patanjali and Nutrela brand names Key Segments: • Sports Nutrition • Medical Nutrition • General Nutrition
OIL PALM PLANTATION -Leading Indian player; MoUs with 11 state govt. • Allocated area of 6.02 lakh hectares, of which 59,239 hectares is under cultivation • Presence in 55 districts, engagement with 42,071 farm families
OTHERS
Oleochemicals: • value-based derivatives of castor, soya and palm • Domestic & export Wind Power: • Capacities across 11 locations with a total capacity of 84.6 MW, Located in Gandhidham (Gujarat) with close proximity to the Kandla and Mundra port
Manufacturing Prowess - Strategic Manufacturing facilities: 25processing plants (of which 19 are operational processing plants) across India, and access to 43 contract manufacturing units.
Revenue Split -
Edible Oil; largest category, accounting for 1/3rd of revenue has the potential to grow multifold on strong and well developed edible oil distribution base of Ruchi Soya Industries
• Top 2 products; Edible Oil and Ghee contribute to 64% of total sale
• Next 6 categories contribute to 36% revenue share; potential to grow multifold by leveraging Nutrela distribution base
• Consists of both high-margin, high-growth products along with high-volume, moderate growth products which shall have a positive impact on margin profile of the company
Future Business Growth may come from the Palm Oil Plantation business - Largest oil palm plantation company in India, with allocated area of 6.02 lakh hectares, of which 59,239 hectares is currently being utilized
• Backward integration strategy to create one of the largest palm oil plantation companies in India
• Public Private Partnership Business model, allows company to maintain an assetlight business model
• Completely digitized procurement and payment process • GEO tagging and other technological support
4 palm oil mills
Installed capacity - 900000
Produced – 467500
This is the Distribution Channel -
Big Basket, Walmart, MORE, Metro Cash & Carry, Spencers
4763 distributors
100 sale depots
524343 customer touchpoints
1,092 Chikitsalaya
3,260 Arogya Kendra operated by Patanjali Group
FY 2022 numbers -
Revenue – 24205
EBITDA – 1565 – EBITDA Margin 7.47%
PAT – 241.36 – PAT Margin 3.5%
YOY growth 48%
QOQ growth 37% June 2022
ROCE – 14.13%
ROE – 15.76%
Debt & Funding Metrics
External Debt paid 3072 cr
The Company has achieved Debt Free status post the FPO. Only Non-fund-based (LC Limits) of ~1,820 crores are being availed.
₹ 792 Cr being utilized for funding of Incremental Working capital
REvenue Split & EBITDA Margins -
88% of revenue comes from Oil & Vanaspati. This is a 3.96% EBITDA margin business
8.27% of revenue from Seed Extraction – This is a 6.37% EBITDA margin business
7.93% of revenue comes from Food Products - This is a 15.40 % EBITDA margin business
0.28% of revenue comes from Wind Turbine Power Generation. This is a 75.50 % EBITDA margin business
More about Palm Plantation & Government Support
Palm Oil Import
India imported around 133.52 lakh tonnes of edible oils costing around ₹ 80,000 crore. Out of all the imported edible oils, the share of palm oil is about 56%, followed by soybean oil at 27%. 74 lakh tonnes of palm oil imported. India Crude Palm Oil production 2.72 lakh tonnes as per 2021 stats
What is Palm Oil
Palm oil is derived from the fleshy mesocarp of the fruit, which contains about 45-55% of oil. Palm kernel oil, obtained from the kernel of oil palm, is the source of lauric oils. With quality planting material, irrigation and proper management, oil palm has the potential to produce 20-25 MT fresh fruit bunches (FFBs) per ha after attaining the age of 8- 9 years. In comparative terms the yield of palm oil is 5 times the yield of edible oil obtainable from traditional oilseeds
Government support to palm oil plantation
The government of India has continuously been making efforts to increase the area production of oil palm. For increased the availability of edible oils in the country and to reduce the import burden, various interventions since 1991-92 through schemes such as the Technology Mission on Oilseed & Pulses (TMOP), Integrated Scheme on Oilseeds, Pulses, Oil Palm and Maize (ISOPOM), Oil Palm Area Expansion (OPAE), National Mission on Oilseeds and Oil Palm (NMOOP) and the National Food Security Mission (NFSM)–Oilseeds & Oil Palm were under implementation in 13 States viz; Andhra Pradesh, Telangana, Chhattisgarh, Tamil Nadu, Kerala, Gujarat, Karnataka, Odisha, Mizoram, Nagaland, Assam, Arunachal Pradesh, Manipur with the funding pattern of 60:40 in case of general States and 90:10 in case of North-Eastern States and hill States.
IF they are able to execute the plantation business they wil go on to become the largest palm oil business in the country. They are targeting 7.5 lakh tonne of plam oil production in the next 30 years, lets extrapolate that to 2.5 lakh tone in next 10 years.
Indias current total Palm Oil production is 2.72 lakh tonne only. Promoter has 80% of shareholding and i think they will offload and bring it down to 75/70. they recently met with some of the big names from Indian mutual fund and pms industry.
Attaching the links to all the info i have shared here.
Investor meet & Business Overview - https://www.bseindia.com/xml-data/corpfiling/AttachLive/42025d11-091e-4b48-86bb-42017c3dbf51.pdf
Q4FY22 concall - https://www.bseindia.com/xml-data/corpfiling/AttachHis/4b162a7a-e46b-4339-8fc5-807a57e40f54.pdf
North East Palm Oil Plantation info - https://www.bseindia.com/xml-data/corpfiling/AttachLive/18fe299b-81db-48b4-baee-c552ea8d0c91.pdf
National Edible Oil Policy - https://www.pib.gov.in/PressReleasePage.aspx?PRID=1746942
Detailed Read on the National Mission on Edible Oil - https://nfsm.gov.in/Guidelines/NMEO-OPGUIEDELINES.pdf
I am invested and I will be slowly accumulating this stock. The liquidity in this stock is low and hence it may be volatile in price movement.
The biggest risk to the business is not being able to execute the plantation business. otherwise its a simple oil trading business (commodity play but essential commodity)
Growth drivers are the foods, and nutraceuticals business in the future, and that growth has not been factored into the price yet.
Waiting for the 2022 Annual Report to the get more detailed understanding on the company