Flex Foods - Can Success Be Achieved, The Natural Way?

Flex Foods Limited, part of Uflex Group of companies, started its operations in 1992 as an Export Oriented Unit, located in Dehradun-Uttarakhand (foothills of Himalaya) engaged in Freeze Drying, Air Drying, Individually Quick Frozen(IQF) and Canning of white button mushrooms, fruits & vegetables, culinary herbs and green pepper corns catering to European, US, Canadian, Australian and Domestic market.. The company has its own captive state of art mushroom growing facility with fully equipped mushroom spawn and compost preparation facilities.
The company started its commercial operations in 1992 by establishing an 100% EOU for vacuum freeze dried vegetables mainly mushroom and culinary herbs with a total processing capacity of 2000 MTs per annum.

List of countries where company export:
-USA
-North America
-Canada
-Europe (U K, Germany, Denmark, France, Belgium)
-Australia
-South Africa
-Middle East countries

Flex Foods offers a wide range of Vacuum Freeze Dried, Air-Dried, Frozen and IQF (Individually Quick Frozen) product range of mushrooms, herbs, spices and fruits/vegetables, meeting strict quality & hygiene standards. Canned button mushroom in various shapes and sizes is also available as per the customer requirement. Flex Foods Limited is a single point source of supplier of Frozen / IQF (Individually Quick Frozen), Air Dried, Canned as well as Freeze Dried products to the customers as per their requirements. A tempting food i.e. retail packs of Culinary Herbs for Indian customers are also available in four varieties in Flex Foods.

New Products:

• Air Dried & IOF – Stevia

• Air Dried – Sugar Beat

• Freeze Dried – Jalepeno Pepper – Red

• Freeze Dried – Jalepeno Pepper – Green

• Freeze Dried – Banana

• Freeze Dried – Green Capsicum10

Further, stevia & sugar beat has been cultivated and samples in Air Dried & IOF form have been sent to overseas buyers for their approvals. Customers have asked for improvement in the texture of the product, which will be developed soon. 

Major Risk:

• Increase in the prices of raw materials, packing material and fuel

• Food inflation in general

• Non-availability of raw materials

• Exchange rate fluctuations

• Changes in fiscal benefits/laws

• Competitive environment with diverse players.

To address these risks, the Company has a single point source supplier of Frozen/IQF, Air Dried as well as Freeze Dried products to the customers as per their requirements with high quality mushrooms and herbs. Though the competition is fierce, the goodwill and the quality of the products offered by the Company are great plus factors and the Company expects to overcome the competition. The Company had expanded its freeze drying capacity by adding print of art freeze dried cabinets.

My Views:

The company remained under my watchlist for long time, since I was busy understanding the scalability of business. But the product portfolio of the company looks good, plus their R&D, which has been continuously coming up with new products, will form its heavy usage, with increasing awareness among people regarding such health oriented products.

Investing in such a company, especially in food sector, is about your belief in the products that company has in its portfolio. If one asks me, I would say, the sale of some of the new products like Stevia, and some culinary herbs, is bound to increase with time. Major advantage I feel, in these products is that, the regular users of these products don't suddenly quit using it. Plus, awareness among people could bring about the increase in sale of these products further. 

The company has been paying very good dividend since long time, which increases my confidence in management, especially, when there has been concerns raised over its management.

The company is growing at a CAGR of 12% in terms of sales, and 22% in terms of net profit in last 5 years. For next few years, it might continue to similar, or slightly better growth, but with time, they will start posting very good numbers, after penetration of their new products in Indian markets.

For Q1 this year, the company posted sales growth of 19%, and net profit growth of approx 100%, which lays down the path for good growth, this year.

Even considering FY'14 earnings, the company is trading at a modest P/E of 7. This year, I am expecting the company to post EPS around 12, which will make the stock look dirty cheap at current market price.

Ganesha Ecosphere - Turning Waste Into Useful Resources

HAPPY INDEPENDENCE DAY TO ALL THE VIEWERS!!!!!

In his first Independence day speech, PM Narendra Modi said "Let us think about 0 defect - that our products are not defected and 0 effect - our products have no adverse effect on the environment". Our new pick is concentrating on the 2nd clause of that statement, by trying to reduce the environmental pollution with its innovations.

Ganesha Ecosphere is India’s largest waste recycling company (with 21% market share), primarily engaged in the recycling of Polyethylene Terephthalate (PET) bottles to produce Regenerated Polyester Staple Fiber.
It recycles more than 2 billion bottles annually and is one of the leading environmental friendly companies in India. The manufacturing plants are located at Kanpur and Rudrapur (Uttaranchal, India).
The company is having the most modern pet waste washing and recycling facilities, which ensure the recycling of waste in environment and people friendly manner. It is having all environmental clearances from concerned departments for its facilities.

How Does It Works?

Application Areas:

Details About Applications Of Products Manufactured By Ganesha Ecosphere:

http://www.ganeshaecosphere.com/applications.html

Recent Recongnizition:

The world’s biggest cola company – Coca Cola is recycling PET bottles waste into textile fibres in India, which in turn are turned into fashion items. Coca-Cola’s largest bottler in India, Hindustan Coca-Cola Beverages (HCCB), is demonstrating its commitment to sustainability by developing commercial solutions for recycling PET plastic. In collaboration with Ganesha Ecosphere Ltd. (GESL), the largest PET recycler in India, HCCB established the nation’s first bottle-to-fibre textile recycling operation.

The best thing about the company is that, their raw material itself is PET bottle waste. Nobody would deny that the use of PET bottle is going to increase in coming years. And with increasing use of PET bottles, the raw material will be easily available to the company. Hence the selection of a company, whose end product is linked to textile industry.

My Views:

I know I am once again, going with a company having higher debt, but there are some factors, which forces me to invest in a company. In case of Ganesha Ecosphere, the company looks very good fundamentally in all the parameters except the debt levels. As I said earlier also, if the company is involved in a strong business, with good growth and promising balance sheet, I won't reject the company just on the basis of high debts. Because of that, I know, the appreciation might be less or delayed, but other factors are too attractive for me not to invest in it. Being a long term investor, I won't mind if the stock price appreciation is less or gets slightly delayed. As far as I believe, if management is efficient, these things will get back on track, as the company grows in size.

Looking at numbers, the company is growing at a CAGR of 20% in sales and 22% in profit, in last 5 years, which is pretty decent. To add to that, because of recent collabrations with some of the top companies, the sales are bound to increase in coming years, at a stronger pace. The recent Q1 results proves exactly that, with a sales growth of 65% and net profit growth of 14% yoy. The net profit growth was sub-dued when compared to sales growth, but that was on account of almost double finance cost this year.

Currently, based on FY'14 numbers, the stock is trading at a P/E multiple of 6, which leaves plenty of scope for appreciation in future. As I said earlier, the stock might move slowly, but patience will pay in the long run, because I feel, the business they are involved in is great, and is expected to grow at a healthy pace, with companies looking forward to save the nature.

This stock is operating under a new sort of segment, hence difficult to give targets on it. And because of that same reason, I would suggest everyone to perform their own detailed study before investing in the company. As always, any investment you make, should be based on your belief and not only on someone else's thinking.

Q1 FY'15 Result Updates - Ajanta Pharma, Camlin Fine Science, Dhanuka Agritech, Dynemic Products and Gulshan Polyols

1) Ajanta Pharma:
Writing about the stock since Sep 2012, its almost 2 years now, i.e. 8 quarters, that we got to study, and no disappointment so far. That speaks volumes about the performance of the stock in past 2 years, and also, the news flow in press releases of every quarter speaking volumes about the continuation of such performance going ahead as well.
By far, it has been the best performer in the portfolio, with a staggering returns of close to 500% since its recommendation. But the saturation doesn't seem to be coming soon.
For Q1 FY'15, the company reported sales growth of 32.5%, and net profit growth of 80%, which was again, above my expectations. Not sure about others though.
With an EPS of 16 in the quarter, that has always been slightly sub-dued for the company, it looks like they are on track to achieve an annual EPS of close to 85-90.
I know this is happening time and again, but with such a performing company, my views are bound to become more and more positive. Revising the target price to 2000 now for long term.
Recommending a (hold / buy on dips) strategy on the counter.

2) Camlin Fine Sciences:
Another decent performance from the company, and it seems to have formed a good presence among intelligent investors, with likes of ICICIDirect coming out with their research on such a small company. The jump in share price also indicate the same thing, as it has been given a fair value based on current data, with market cap of the company almost kissing 500 Cr.
However, on the other side, the positive news flow continues with their subsidiary namely CFS Europe S.p.A in Italy successfully enhancing its manufacturing capacity to 1000 metric tons per month as against 600 metric tons per month from May-2014 and the facility is now operating at its enhanced level of production after successfully running at its full capacity in the month of June-2014 and July-2014.
Sales grew by a modest 14% and net profit grew by 50% yoy, and the performance is likely to improve going ahead this year. Recommending a (hold / partial profit booking if reqd) strategy on the counter.

3) Dhanuka Agritech:
The Q1 numbers might look disappointing to few on first overview, but that was on account poor rainfall, in the month of June. However the company has been successful in improving margins, over past few quarters, and this quarter was no exception to that. In spite of meager 7% growth in sales yoy, the net profit grew by healthy 18%, which was the best part of mediocre results.
The company hopes to perform better in second quarter. The company has received registrations for two new, scientifically advanced products recently and they will be launched soon for the first time in India, for the benefit of the Indian farmers.
Being in India, and India being an agricultural nation, one should continue holding the stock, even at these expensive levels.

4) Dynemic Products:
Once again, it is among the companies, whose performance has been quite mediocre in Jun quarters, historically. Still, the performance this time, was slightly better than previous years. The sales grew by 16%, which was decent, however, profits growing by only 8%, came as a disappointment to many. I, probably, wouldn't mind that too much until the sales keep growing in good fashion. The good thing, was the rise in sales, in both, domestic as well as export front. Even after such a mediocre 8% growth in profit, the EPS for the quarter stood at 1.94. The number should improve in coming quarters, as I am expecting the company to post an annual EPS of atleast 10-11, which makes the stock look dirty cheap at a P/E ratio of 4, in highly potential business.
Recommending a buy/hold strategy on the counter, after detailed study, as it is still, a very small company, when compared to some of the others discussed here.

5) Gulshan Polyols:
After 5 major announcements made by the company last quarter, there was lots of expectations from the company to deliver strong set of numbers. But the numbers came in flat with sales growing only 3% and a declining net profit yoy. It came in to surprise of many, but this time, along with results, the company came up with press release, indicating the reasons behind such performance after big announcements. The benefits of new plant and technology up gradation are expected to be come in from second half of this fiscal.
Expecting the company to achieve 15-20% sales growth in this fiscal, by covering up in later part of the year, and end it with annual EPS of close 40. If that is achieved, the stock is expected to be re-rated from this levels, by about 75%.
Recommending a hold on the counter for long term.