To be honest my opinion is biased as i have invested significantly and its been already a rewarding journey
I would like to give my investment rationale which will cover opportunities and scalability and why i am holding
1.Shift from unbranded to branded: This is numero uno reason , there is huge shift ,we have moved from traditional kirana stores to d mart ,amazon ,blinkit however this is only in tier 1 cities but soon it will move to t2 and t3 cities , only branded groceries sold in these hypermarkets and e commerce,i mean yes loose is sold but branded takes a significantly higher chunk so there is going to be huge demand
- Eating market share of KRBL - no need to explain
3.value added products : they have tried umpteen products and finally fix with current line , ( i remember they launched saute sauces which nowhere is to be seen ) , kari kari is getting good response and now they started exporting to aus and dubai , this product is high margin product
There biryani kit also making good progress with RTH line is seeing good response
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EU market dominace :They are no 1 in EU with factory in rotterdam ,EU has very strict fda rules with very strict numbers limit for pesticide so its difficul to make inroad in market , this will serve as entry barrier
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Entry in Middle east : This was completely unexpected and perhaps will be most rewarding too because middle east is completely dominated by KRBL and high margin as compared to EU .With salic holding significant stake , i expect lt foods to replace krbl ,also krbl’s distributor issues is going from long time .And they didnt give satisfactory answer in con call last qtr (Dont know latest status)
6.Unexpexted trigger :They randomly got order 3 years back for cuppa rice from indian railway if something like this happens on large scale it will have huge impact
You can combine above points and gauge opportunities ,I blv broader picture and TAM is very high
Also management is absolutely superb with next generation also there,i have beeen part of umpteenth con call and Till date arora ji has walked the talk , he gave us assurance in con call when debt to equity was 3.5 that we will reduce debt,did product launches as per timelines ,gave clear picture on things which are not working, i strongly blv this can become fmcg company provided RTH and kari kari grows
Also one important point is organic buisness was growing 60 70% before 2022 now showing de growth of 40 50% because of some duty on soya by USA,eventually some thing will work out,these kind of restrictions genrally are short time period so once thats is lifted we will again see growth in organic
Also somebody in thread talked about government control on export, Government bans only broken rice and parboiled rice in which lt foods doesnt deal , also there was some minimum order restriction prev year which got revised immediately after protest
Disc : more thw than 30% of portfolio is invested from 6 7 years so biased
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