1 P a g e. Report By: Arnab Dasgupta Page 1

Transcription

1 1 P a g e Report By: Arnab Dasgupta arnab@dynamiclevels.com Page 1

2 KRBL Ltd- Rice Bowl of India Company Overview and Stock Price 3 Famous brands of KRBL 4 Company Financials 5 Peer Comparison 9 Shareholding Pattern 10 Industry Overview 11 Company future Outlook 13 Strengths of KRBL 14 Investment Rationale 15 Page 2

3 Company s Overview and Stock Price KRBL is the leading Indian rice Company exporting product throughout the world. When we think about Basmati, we think about KRBL. It is India s first integrated rice company with a comprehensive product chain. The company always educates its farmers with modern technology and skills of farming and getting results for that. Their flagship brand India Gate Basmati rice is a renowned brand in the world market. KRBL today is the largest rice miller. It has a strong brand presence through collaborations with global retails chains. The company has a wide market share in the Middle East countries, especially Saudi Arabia. KRBL exports basmati rice to 73 countries in the world. It is the largest manufacturer of Basmati Rice Seed in the world. The company has a capacity of producing 195 MT per hour. The export price per MT commands a premium of more than 30% over the industry average. It has a wide marketing and selling network with presence at 6, 90,000 retail outlets in the country. 35% of basmati seeds in India are provided by KRBL. KRBL Share Price Performance EXCHANGE SYMBOL KRBL Current Price * (Rs.) Face Value (Rs.) 1 52 Week High (Rs.) 290 ( ) 52 Week Low (Rs.) ( ) Life Time high (Rs.) 290 ( ) Life Time low (Rs.) 1.02( ) Average Daily Movement 9.53 Average Volume Month Return (%) 4.52 P/E Ratio (x) Book Value Market Cap (Cr) % of Promoter holding NIL pledged Chart Hypothesis: The chart shows that the stock is in complete breakout and making new high COMPANY PROFILE OF JUBILANT Date of Incorporation 30-Mar-1993 Date of Listing 24-Jan-2002 Management Name Designation Anil Kumar Mittal Chairman & Managing Director Ashwani Dua Ind. Non-ED Devendra Agarwal Ind. Non-ED Shyam Arora Ind. Non-ED Vinod Ahuja Ind. Non-Executive Director Anoop Kumar Gupta Joint Managing Director Arun Kumar Gupta Joint Managing Director Ashok Chand Whole Time Director Priyanka Mittal Whole Time Director Registered Office Address 5190, Lahori Gate,110006,New Delhi, India Website Famous Brands of KRBL Page 3

4 Famous Brands of KRBL India Gate The flagship brand of KRBL, India Gate is recognized both in India and abroad with strong presence and impressive market share. It has earned respect and patronage amongst consumers and retailers over the years and today it s a matter of pride to be the proffered brand amongst global households. It is termed as Heart of India. Made in India. World s largest Rice Millers & Basmati Rice Exporters Doon Doon Basmati rice can be uniquely identified by its fragrance and length of grains. Since it is one of KRBL s prestigious Basmati rice brands, it comes in diverse brands and packages. They are - Basmati rice Premium, Basmati rice dubar, Basmati rice Tibar, mini dubar, Mogra, mini Mogra. Nur Jahan Nur Jahan is one of KRBL s prized brands and keeps the flavor, aroma and the looks of Basmati rice intact. It is marketed and packaged for both domestic and international purposes. The domestic market enjoys all three variants namely, Basmati rice, Sella golden and Sella white available in 1kg, 5kg and 25kg packs. Its Basmati rice variant is exported to Canada, Kuwait, UAE, Singapore and Australia. Indian Farm Just like Basmati rice is noted for its fragrance and delicate flavour, Badshah Basmati rice maintains the reputation and also lives up to its name. It is one of the leading Basmati rice brands in India in terms of consumption and sale. World s largest producer of Basmati Rice Seeds India s first fully integrated & scalable Rice Company Bemisal Bemisal rice grains are longer and characteristically free flowing rather than being sticky when cooked. This exceptional quality Basmati rice is marketed, sold and packaged solely for Indian market. Sold in 1, 5 and 25 kg packs, it comes in two variants Bemisal Basmati Rice and Sella Golden. Page 4

5 Company Financials Income Statement (In Cr) Mar-16 Mar-15 Mar-14 Annual Annual Annual Net Sales/Income from operations 3, , , Other Operating Income Total Income From Operations 3, , , Increase/Decrease in Stocks Consumption of Raw Materials 2, , , Purchase of Traded Goods Employees Cost Depreciation Other Expenses Total Expenditure 2, , , Operating Profit Other Income P/L Before Int., Excpt. Items & Tax Interest P/L Before Exceptional Items & Tax Exceptional Item P/L Before Tax Tax P/L After Tax from Ordinary Activities PAT Net Profit/(Loss) For the Period Equity Share Capital Reserves 1, , , Equity Dividend Rate (%) EPS (Rs.) [Before Extraordinary items] EPS (Rs.) [After Extraordinary items] Profitability Highlights: The Company achieved highest ever total revenue of Rs crores during the year as compared to Rs crores in the previous year. An increase of 8.5% yearly. Company has been able to achieved volume growth 25% during the year and sold total rice of 5,91,742 MT as compared to 4,73,441 MT during last year. Company achieved highest ever Operating Profit of Rs crores as compared to Rs crores same period last year. Company achieved highest ever Profit After Tax (PAT) of Rs crores as compared to Rs crores last year. Earnings per Share (EPS) increased by 4.82% from per share last year to Rs per share this year. Page 5

6 ASSETS Balance Sheet (in Cr) Mar-13 Mar-14 Mar-15 Mar-16 Cash And Equivalents Short Term Investments Total Cash & ST Investments Accounts & Notes Receivable Total Receivables Inventories Prepaid Exp Restricted Cash Other Current Assets Total Current Assets Net Property, Plant & Equipment Long-term Investments Deferred Charges, LT Other Long-Term Assets Total Assets LIABILITIES Accrued Exp Short-term Borrowings Accounts Payable Curr. Income Taxes Payable Other Current Liabilities Total Current Liabilities Long-Term Debt Unearned Revenue, Non-Current Other Non-Current Liabilities Total Liabilities Pref. Stock, Non-Redeem Total Pref. Equity Minority Interest Additional Paid In Capital Retained Earnings Treasury Stock Comprehensive Inc. and Other Total Common Equity Total Equity Total Liabilities And Equity The asset value of the company is increasing every year except in last year. The company is able to reduce its short term borrowings by 21% in FY 16 from last financial year. The long term debt of the company has also reduced by 15% last year. The company is able to reduce its total debt by 21% in FY 16 compared to those of FY 15. Page 6

7 7 P a g e Cash Flow (in Cr) Mar 13 Mar 14 Mar - 15 Net Income Depreciation & Amort., Total Other Non-Cash Adj Changes in Non-Cash Capital Cash from Ops Capital Expenditure Sale of Property, Plant, and Equipment Cash Acquisitions Proceeds from Investment Divestitures Invest. in Marketable & Equity Securt Other Investing Activities Cash from Investing Net Short Term Debt Issued/Repaid Long-Term Debt Issued Long-Term Debt Repaid Total Debt Issued/Repaid Pref. Dividends Paid Total Dividends Paid Increase in CapItal Stocks Decrease in Capital Stocks Special Dividend Paid Incr(Decr) in Deposits Incr(Decr) Insurance Reserves Other Financing Activities Cash from Financing Net Change in Cash Supplemental Items Cash Interest Paid Cash Taxes Paid Free Cash Flow Change in Net Working Capital The net income and cash from operation of the company is increasing every year. Page 7

8 Ratios Profitability Ratios Mar 13 Mar 14 Mar 15 Mar 16 EBITDA Margin Operating Margin Profit Margin Return on Assets Return on Equity One can see that the operating margin ratio of KRBL is increasing in every year. The increasing profit margin indicates a steady performance of the company Leverage and Mar 13 Mar 14 Mar 15 Mar 16 Coverage Ratios Current Ratio Quick Ratio EBIT/Interest Tot Debt/Capital Tot Debt/Equity Eff Tax Rate % The current ratio of the company is increasing every year which indicates a good liquidity. The debt equity ratio of the company is in a decreasing mode every year. Page 8

9 Peer Comparison Company Name: KRBL LTD LT FOODS LTD Latest Fiscal Year: Mar - 16 Mar Week High Week High Date 17 th Jun16 24th Nov15 52-Week Low Week Low Date 7 th Sep15 25 th Aug15 Daily Volume Current Price: Week High % Change Week Low % Change Total Common Shares (M) Market Capitalization (CR) (CR) Total Debt Preferred Stock Minority Interest Cash and Equivalents Current Enterprise Value The data can show that KRBL has given much higher return to its investor in comparison to its Peer Company. Company Name: KRBL LTD LT FOODS LTD Leverage/Coverage Ratios Total Debt / Equity % Total Debt / Capital % Total Debt / EBITDA Net Debt / EBITDA EBITDA / Int. Expense The debt equity of KRBL is less in comparison to its Peer Company. The debt/capital ratio is also much solvent than its Peer Company. Page 9

10 Share Holding Pattern of KRBL Shareholding Pattern Mar-16 Dec-15 Sep-15 Jun-15 Mar-15 Promoter and Promoter Group (%) Indian Foreign NIL NIL NIL NIL NIL Institutions (%) FII DII Non Institutions (%) Bodies Corporate NIL NIL Others Custodians NIL NIL NIL NIL NIL Total no. of shares (cr.) Persons holding securities more than Category Mar-16 Dec-15 Sep-15 Jun-15 Mar-15 1% of total number of shares under category Public Shareholding. RADHA RAJ ISPAT PRIVATE LIMITED Promoters RELIANCE COMMODITIES DMCC Non Promoters ARUN KUMAR GUPTA Promoters ANOOP KUMAR GUPTA Promoters ANIL KUMAR MITTAL Promoters ANIL KUMAR GOEL Non Promoters ABDULLA ALI OBEID BALSHARAF Non Promoters OMAR ALI OBEID BALSHARAF Non Promoters ANOOP KUMAR GUPTA, KARTA OF Promoters ANOOP KUMAR GUPTA HUF ANIL KUMAR MITTAL, KARTA OF Promoters NIL 3.02 NIL BHAGIRATH LAL HUF PREETI MITTAL Promoters BINITA GUPTA Promoters ANULIKA GUPTA Promoters ARUN KUMAR GUPTA, KARTA OF ARUN Promoters KUMAR GUPTA HUF ASHISH MITTAL Promoters KOTAK MAHINDRA (INTERNATIONAL) Non Promoters 1.92 NIL NIL NIL NIL LIMIED KUNAL GUPTA Promoters SOM NATH AGGARWAL Non Promoters Page 10

11 Industry Overview Agriculture is the backbone of Indian Economy. About 65% of Indian population depends directly on agriculture and it accounts for around 22% of GDP. At million hectares, India holds the second largest agricultural land in the world. With 20 agri-climatic regions, all 15 major climates in the world exist in India. India is the second largest producer of Rice. The Government of India has introduced several projects to assist the agriculture sector. They are Pradhanmantri Gram Sinchai Yojana: The scheme aims to irrigate the field of every farmer and improving water use efficiency to achieve the motto `Per Drop More Crop. Overall the scheme ensures improved access to irrigation. Paramparagat KrishiVikasYojana (PKVY): The scheme aims to motivate groups of farmers to take up organic farming. Government of India has released a new subsidy for the establishment of 988 Farm Machinery Banks during under Sub Mission on Agricultural Mechanisation. Rice is the most important cereal food crop of India which occupies about 24% of the gross cropped area of the country. It contributes 43% of total food grain production and 46% of total cereal production of the country. India is at present the biggest exporter of basmati rice in the world. It produces nearly 7.5 million tons and exports approximately 2.5 million tons. Majorly India exports Basmati rice in the Middle East which acts as a potential client base. Iran is also amongst one of the major client base of Indian Basmati rice. Page 11

12 Advantageous Position of Basmati Rice Production & Export Basmati Rice is just 2% of total Rice Production in the World. Basmati Rice is GI Product and Grown only in India (70%) and Pakistan (30%). Simple product no hi tech processing required / no fad / processed food. Highest quality and high valued product, not commodity. No China competition / other countries threat Grown only in India and Pakistan. Govt regulations no government / regulatory interference. Economy, war, global crop patterns etc No major impact. Pricing Premium over competition. New entrants require huge marketing budgets and organizational management to manage entire supply chain. Page 12

13 Company Future Outlook With a business model rooted in the heart of India and steered by the flagship India Gate brand, KRBL continued to remain at the top of the industry ranking in terms of Basmati production and trade, both within and outside the country. With sustained quality focus, which enabled a 31% higher than industry export realisation and its flagship brand India Gate realising 57% higher than industry export realisation, the Company reported excellent numbers to post impressive performance in terms of revenue and profitability. The Company s strengths in production capacity and brand superiority have positioned it ideally to leverage the growing demand for basmati within and outside India. KRBL registered a 13% value growth in the Domestic basmati market during the fiscal under review an indication of its increasing presence in the domestic market. The Company further expanded its exports to the Middle East, particularly Saudi Arabia, UAE, Iran, Iraq, Kuwait and Qatar. The region account for 80% of the Company s branded basmati exports. KRBL is the largest branded Basmati player in these countries, along with Bahrain Oman & Lebanon, and also one of the most recognized brands in Jordan and other Levant Countries. KRBL s expansion strategy during the year was further driven by itswell-entrenched distribution networked, backed by strategic marketing initiatives. The Company s retail presence extends across 6,60,000 outletsin the country. It has strong tie-ups with several domestic retail chains, including Food Bazaar, Spencer s, D Mart, Reliance Retail, Vishal MegaMart, N Mart, V. Mart, Star Bazar, Spar, Aditya Birla More, Walmart,Reliance Cash & Carry, Metro Cash and Carry, Sabka Bazaar, Big Apple,Hypercity, Easy Day and in E-Commerce such as Big Basket, LocalBanya, Green Cart, Vege Cart etc. Page 13

14 Strengths of KRBL Strong Legacy and Brand equity: With over 120 years of legacy, KRBL has built nucleus strengths to steer its exceptional growth. KRBL s brand reputation and recall have lent it global leadership in basmati rice. Management strength and Committed Team: KRBL is led by a visionary and far sighted management, which thinks beyond tomorrow. Integrated Value Chain & R&D Capabilities: The Company has a core of R&D capabilities that ensures the highest levels of quality and excellence. Strong Farmer Relations & Dealer Network: Closely Knit contact farming operations that help in maintaining consistent supply of good quality paddy. The company has pan India retail reach backed by a large distribution and marketing network. State-of-the-art Plants & Storage Facilities: KRBL has the world s largest and most modern milling capacities. The company has large, automated facilities for storage space and warehousing. Captive Power Generation & Focus on Green Manufacturing: The company has its own power generation capacities to meet its energy needs and for sale. KRBL is continuously expanding its presence in eco friendly non-conventional power generation. Upcoming Opportunities Evolving lifestyle and Consumer preferences: With changing in lifestyles, consumer preferences are shifted from non branded to branded rice and from traditional local markets to modern retail formats. Global Market Expansion and increased consumption: Global rice consumption, particularly in the Middle East led by Iran, is continuously increasing, enabling expansion of the rice, especially Basmati rice market. Great Access to World Market: With the rice becoming the staple diet of more and more people across the world, Basmati is becoming more accessible to world markets. Page 14

15 Investment rationale: KRBL is the world s largest rice Millers and Basmati rice Exporters. The company is India s largest selling Branded Basmati Rice Company. It has a big global retail distribution chain with presence in 73 countries.the Company enjoys a leading position in Saudi Arabia s market which is the largest consumer of Basmati Rice in the world. The company is the largest manufacturer of Basmati Rice seed in the world. 35% of Basmati seeds in India are provided by KRBL. India Gate the flagship brand of company, is the topmost selling rice in the Branded Rice segment, both in India and Overseas market. KRBL has 25% share in the Branded Basmati Rice sell in exports market and more than 30% share in the domestic market. KRBL has a manufacturing capacity of 195 MT per hour. The company has a good record of realizations in the market. Export rice pet MT commands a premium of more than 30% over the industry average. The short term loan of the company rated [ICRA]A1+ by ICRA, indicating highest credit quality in the industry. Long term loan of the company under (ICRA)AA- by ICRA, indicating high degree of safety. The total Net worth of the company increased from Rs crores in FY 2015 to Rs crores in FY Last 3 year Net sales growth at CAGR of 18.11% and EBITDA growth at CAGR of 21.14%. Last 3 year Average return on capital employed of 19.12%. Last 3 year Average return on equity of 26.21%. We initiate coverage on KRBL Ltd as a with a target of Rs 350 representing a potential upside of 35% from the buy price. KRBL is trading at a PE of Page 15

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