Hi,
Had a talk with IR team. The person gave a brief idea about the business. He told that the company will go for its first hatchery this year at a cost of 12 crores. Each hatchery gives 20 crores in revenue. Revenues from hatcheries will flow in FY 17 and onwards. EBITDA margins here are 20%.
Regarding the feed business – he told that there is huge demand – supply gap – demand being very less compared to overall supply. Supply is – 14lacs, demand is mere – 7-8lacs.
This will create pressure on margins. So what we see as 10-12% EBITDA margins will reduce in years to come.
Company currently processes 4000MT and doesnt want to expand it as of now. But company has entered into exports and wants to export all its 4000MT of processing one day (next 5 years). Sad part is exports provide a mere 2-3% EBITDA margins.
Industry is running in a rough phase. With much less bargaining power in the business and over supply, the coming business is going to be really tough.
Adding to the worries, those who are expecting a good quarter result, flood in Nellore has destroyed the farming practise, leading to big impact on revenues.
Disc: Invested at 100 level. It is scary, if the IR team is negative about the business. Thinking to switch my investment.
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