Venkys India...Spicy multibagger

By -
Company Name: Venky’s India (BSE code: 523261)

Industry: Packaged foods

Recommendation: Buy in the range of Rs.1350-1450 for long term holders and add on dips at Rs.1100
(Short term holders can buy with expected price of Rs.1650-1700 in one year frame with a medium risk since it is trading at 52 week high)

Investment horizon: 4-5 years

About the company:
The VH group was established in 1971, when motivated by his wife Late Smt. Uttaradevi Rao

Our founder Chairman Late Padmashree B.V Rao, fondly referred to as “The Father of the Indian Poultry Industry”, established Venkateshwara Hatcheries Pvt. Ltd. in Pune (India). Today the group is popularly known the world over as “Venky’s”. With a unique combination of expertise and experience and supported by strategic collaborations, the company diversified its activities to include SPF eggs, chicken and eggs processing, broiler and layer breeding, genetic research and Poultry diseases diagnostic, Poultry vaccines and feed supplements, vaccine production, bio-security products, Poultry feed & equipments, nutritional health products, soya bean extract and many more. Today the group is the largest fully integrated poultry group in Asia. The VH group today plays proud parent to a number of reputed organizations under its wide umbrella and successfully caters to poultry and its allied sectors.The pioneering efforts of the VH Group have been well rewarded with several national and international awards
Venky’s is an integrated player in the poultry business. Venky’s rears chicken which is sold as live birds to distributors and which are finally sold as chicken meat.  







Pros:
  • Institutions are increasing their holdings
  • Strong promoter holding 56%
  • Demand of chicken to grow at a faster pace of 20%p.a. The vast gap between our present per capita consumption (64 eggs and 3.5 kg. of meat) and National Institute of Nutrition (NIN) recommended level (180 eggs and 11 kg of meat) offers an excellent opportunity for the growth of poultry industry at least for the next two decades.
  • Innovation and Quality are the main focus
  • Reaching out the Customers through technology
  • (Packed Raw Chicken –easy to make the fried items available at bigbasket.com)
  • It could be the next Britannia Industries

Cons:
  • The Industry is vulnerable to certain risks like death of chicks due to disease
  • Raw material cost is being regulated
  • Even though debt is used for meeting the increased demand but the inherent risks involved in the industry influences the decision making of the management
  • Low return on equity


Financial Highlights:
  • Healthy dividend pay-out ratio-20%
  • Top line is growing at 20% which is consistent and OPM is at around 6% in FY 16 and it is at 11% in FY 17
  • The company is acquiring the market share rapidly with slight increase in the OPM gives a rapid increase in Net profits
  • Debt is at Rs.700 crores which is 5 times the Net profits of FY 16. The company has raised the debt only to cater the growing demand.
  • The stock is trading at a P/E ratio of 16 whereas the other companies in the industry like Hatsun and Glaxosmith are trading at 35 P/E
  • Sales per share is at Rs.1650
  • Average Return on equity for last 3 years is at 7.65
  • Credit rating of A1 from ICRA


Narration
2012
2013
2014
2015
2016
2017
Sales
           992.46
       1,426.43
       1,736.12
       1,730.81
       2,121.86
 2,476.36
Expenses
           924.33
       1,366.05
       1,669.52
       1,628.93
       1,993.77
 2,198.21
Op Profit
             68.13
             60.38
             66.60
           101.88
           128.09
     278.15
OPM
                6.86
                4.23
                3.84
                5.89
                6.04
        11.23
Net profit
             41.06
             24.78
             34.04
             18.70
             29.85
     124.75
EPS
             29.15
             17.59
             24.16
             13.27
             21.19
        88.55
Price to earning
                8.95
             20.81
             13.94
             16.64
             17.85
        16.10
Price
           260.91
           366.04
           336.78
           220.86
           378.21
 1,425.35


Management:
  • Anuradha J Desai - Chairperson VH group
  • B Venkatesh rao – MD Uttara foods & Feeds Ltd
  • Balaji rao-- Managing director, Venkys india ltd
  • Jitendra M desai-MD Venkateshwara Research & Breeding Farm Pvt. Ltd.

Rating:

  • Technical Rating: 85
  • Fundamental Rating: 70
  • Overall rating: 78


Valuations: With the investment horizon given, considering all the inputs of estimates  the valuations are at Rs. 6500

(The valuations are calculated on the basis of financial inputs but investors are required to invest based on the business potential and business risks too) 

 ANNUAL REPORT FY 16

ANNUAL REPORT FY15

Comments

Post a Comment

Popular posts from this blog

Prolife Industries...Niche industry ...a Potential Multibagger

By -
Prolife Industries CMP: 159.7 Current market cap: 63 Cr  1. Company engaged in mfg of Dyes, Pigments, pharma and agro chemicals 2. After the demise of previous MD, his son taken over the responsibility of MD – He is just 28 years old but has extensive experience in R & D 3. Future growth a. Mgt planning for 150-200 Crs topline as the company invested in capex in the last 3-5 years from their cash flows b. New products added with better margin joining i. Violet acid which has world wide demand – they are tapping eurpoean markets ii. Very few players in producing this iii. Continous spending on R&D and getting c. Superb ROCE maintaining above 25% d. Fantastic cash management – entire cash cycle is less than a month e. With a net margin of 20-25 crs and higher ROCE, it can demand higher multiples of 40 times and can be a 1000 cr enterprise value (bcoz of net debt free too) 4. Deployed experienced mgt across different countries to grab more export share 5. Managemente is highly spe
Read more

This Pharma Stock has potential to generate 100% Return in Short term

By -
Image
In the current market scenario, the market is in downtrend and many have sectors have underperformed So one has to chose the selective sectors which are defensive enough to their portfolio So Pharma would be one sector which can help to stablize your portfolio becuase many global factors are positive for this Industry due to recent Covid-19 issue What happended to pharma industry till now?? The Pharma Index has been consolidating for almost 5 years till now, let me show you some numbers So in the above image its clear that, the pharma index has made multi year top in April 2015 at 14000 levels and now its trading at 8412 From the above, its giving breakout on monthly charts which means now entering into  bull phase back with a logical reason Coming back to the company The company which i am disussing now is Cadila Health Care .  Now Its trading at 350 levels Let us discuss some facts and interesting points about Cadila Health Care for investment purpose
Read more

How to Start Forex Trading for Beginners 2020

By -
Image
                       Forex trading is one of the largest market in the world with almost $5 trillion daily volume when you compare with the equities, it is just $85 billion and US Treasury market is $550 billion. So it is bigger than the US equitues and Treasury markets put together Where do these Forex markets operate?  We have different stock exchanges for equities like New york stock exchange, London stock exchange, Bombay Stock exchange located at their respective cities.  But for Forex - there is no physical location! You heard it right. There is no central location for Forex market, it is only the global electronic network of banks, financial brokers, financial institutions and traders who buy and sell currencies  When do these Forex markets operate? One of the interesting future for Forex market is it operates 24 hours a day except on weekends Let us consider Asia/Kolkata as the base time, becuase when i start trading from India I usually wait for US market to open  So it usua
Read more

4 Tips for setting up a Good Forex trading System

By -
Image
  One thing that comes to our mind while we are trading Forex is - Do we have a right trading System The point to be noted here is Does all right trading systems makes money. If it is so then the same will be followed by everyone which will lapse the opportunities in the market When i was starting a business, a wise man told me every step you take will have impact on your business and its growth. So take all the inputs provided by others and make a informed decision. The same thing can be even applied for Trading too, You can not blindly trade on others suggestions. One should create their own Forex trading system So Firstly you are still confused about what is a trading system? Ya, Let me give you the basic outline about trading system - It could be defined as a set of rules based on which you take a trade Example: I have a trading system which says that you have to buy only when this particular technical indicator gives  a buy signal On a broader level, let us classify that into 3 fa
Read more