To add to the ongoing perspective from Nellore: As I was there at home for Diwali, was able to see the situation on ground – but am late, as got severely sick:

Prawn and Fish lakes have in general lost heavily. Some clever farmers like my uncle have forecasted the weather and moved to place safety nets combined with high power pumping machines in place (though the idea is not new, but its about execution and timing) have not faced the wrath. But they are very few of them. The loss is estimated to be in higher double digit crore rupees. This effect will be visible both on the immediate demand, due to financial capability of the farmers and continuing rains that hinder the preparation of farms for the next round of corp.

Does this warrant a buy around 380? Is there any reason why it has fallen from 600 level?

Hi Prash – Please see attached Tree House.xlsx (15.1 KB)

Promoter is not as innocent as it sounds. Negative cash flow from investing (to support expansion) + rising receivables means either resort to debt or dilute equity. Debt is “dirty” and can impact net profit so promoter here diluted equity by 25% since mid 2012. However, to keep its stake constant at ~ 30%, it started to buy shares via borrowed funds and this resulted in rising pledge shares. Thus even after buying 2.7 mn shares since sept 2013, promoter stake in the company is close to the june 2012 levels i.e. ~ 30%.

So promoter now have to fix the receivable problem and generate more operating cash to strengthen its fundamentals.

How many of Cadila and Biocon drugs reached Phase 2.
By the way.. Suven is not only in drug discovery, its also in CRAMS business.

Management clarification gives the comfort. But still it is puzzling why would anyone want to pledge shares to buy back its own shares as management claims. It may be seen as confidence in the company, but management should also have known it can act against the shareholders when things turn bad as it happened now.