Roses for greetings and Food for thought
Founded by SRK (Sai Ramkrishna Karuturi) in the year 1994, Karuturi Global has matured into a leading producer of cut roses and has aggressive expansion plans in the area of production of premium cereals to covert itself into a Complete Agriculture production company. About Karuturi’s Business
1. Company grows roses on an area of 239 hectares and has a capacity to produce 555 million Rose stems annually. It has operations in India, Kenya and Ethiopia which are low cost production bases. US, Europe and Japan are the key markets served by the company. Europe is the largest consumer for Roses and the company has 9% share in this market.
2. The game changer proposition however is company’s entry into cultivation of premium cereals, Edible oils and processed foods. Karuturi has acquired 3.11 Lac Hectares of land parcel on lease in Ethiopia for this purpose.
3. Out of above 3.11 Lac hectares, company has already started operations on 11 K hectares for maize and Rice cultivation. On the 3 Lac hectares, the company proposes to grow cereals and Oil Palm. The company plans to cover a major area of the above in cultivation in the next two years.
4. The agriculture business will primarily cater to the COMESA (Common market for Eastern and Southern Africa) which has a population base of 400 Million. Hence there is a ample market for company’s produce.
The information on Moneycontrol is not 100% accurate because only standalone results are shown and consolidated results are ignored. The book value of kgl is abt Rs15.50 as per india infoline website,also diluted eps is more than Rs.2 and thus the p/e ratio is 5-6......i wonder how most of the people give their views without a proper study. According to me karuturi came below Rs.12 to make new lows because warrants were converted to equity shares at Rs.12 and also Mr.Ram Karuturi wanted to raise his holding @ a lower price so they dragged the price further down to Rs.10.45.
Karuturi Global has 14 subsidaries:-
1 KTPL Karuturi Telecom Pvt Ltd
2 KFTPL Karuturi Floritech Pvt Ltd
3 KFPL Karuturi Foods Pvt Ltd
4 KFEPL Karuturi Flower Express Pvt Ltd
5 KOL Karuturi Overseas Ltd
6 EM PLC Ethiopian Meadows PLC
7 KA-PPL Karuturi Agro Products Plc
8 SBPL Sury Blossoms Plc
9 FZE Flower Xpress FZE
10 KL Karuturi Ltd
11 RHL Rhea Holdings Ltd
12 SHL Surya Holdings Ltd
13 YIL Yashoda Investments Ltd
14 KHL Karuturi Hospital Ltd
If you go through the consolidated balancesheet and P/L A/c, you will realise that KGL makes most of its profits through its 100% owned subsidaries mentioned above.
The stock has a potential to make new highs @ around Rs.50 after 2nd quarter results in October 2011 and then onwards add Rs.25-30 every quarter as the revenues from rice,sugarcane etc,. hit the balance sheets!!!This script is not for the faint hearted but for people who invest in potential multibaggers after careful study of facts and fundamentals of the company.
Download:
Please care to correct me if im wrong with my facts/figures.
Regards,
Tejas
Nice to see you are positive on the stock..
ReplyDeleteOn a constructive note, would appreciate if you can try to explain in detail or do some scenario analysis of how Karuturi would reach 50 giving ur assumptions of EPS and relevant PE.
Just for starters assuming the market does not want to give the stock a PE of more than lets say 6 to 8 then the EPS ur talking about is close to 6.25 to 8.33 EPS which is like three times the current EPS. Then ponder over to see if KGL can really churn out higher revenues so fast..
By doing so your understanding of the company will sure change 6 months down the lane(positive or negative) based on how one's understanding is returned in action by the company..
Adjusted Net Profit[In crore Rs.]
ReplyDelete2010 2009 2008 2007 2006 2005
146.11 116.47 123.48 39.06 13.88 5.91
Adjusted Profit After Extra-ordinary item
Dec-10 Sep-10 Jun-10[In crore Rs.]
45.1 39.2 40.6
The company has a growth rate of 25-26% and operating margins of 37%.
Kgl expansion plan goes as follows:-
http://www.moneycontrol.com/news/business/karuturiglobaleyesmorethan40growthratefy12_529711.html
Price to book value at Current market price of Rs.14.40 is 0.92.Also the current P/E is 7.2 and has a P/E range of 5 to 19 on 52 week basis.
The area of concern in this stock is low promoter holding and free float in the market which is leading to stock manipulation by the brokers around.But that is the story with almost every multibagger,the trick here is to enter the stock at the right price.Most of us would enter such stocks when it is already overvalued and near its 52-week high expecting it to make new highs and most cases end up losing as brokers/multibaggers etc,. sell at those levels as they have entered the stock at a much lower price or closer to the 52-week low price.
KGL should have P/B[price to book-value] ratio between 2 to 3,i.e.Rs.30 to Rs.45 in the short term.Then the stock should be tracked on Qtr on Qtr basis to see if they are able to deliver on their estimated targets.
Regards,
Tejas
Great Job..Keep up the good work..
ReplyDeleteRegards,
Harish
what is your view on NUTEK ?
ReplyDeleteNice article..indeed it seems from oct'11 onwards revenue start hitting the balance sheet... but from 11 to 50 in just 4 months ..is it possible ?
ReplyDeleteWill the revenue's will so high to impact such that valuations will be 5 times?
Thanks
Sharma
cooltj how r u man?
ReplyDeletethis post is copied from website brothers.........
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ReplyDeleteThank You for trading tips
trading tips
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ReplyDeleteregards:
<a href="http://trade4targettrade4target.blogspot.com/2011/05/trade4target_25.html" title="trade4target>trade4target</a>
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ReplyDeleteregards:
trade4target
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Hi Tejas,
ReplyDeleteDo you still have same opinion on KGL future? Do you feel it is still a multi bagger??
Why KGL was down 10% today? Any news?
ReplyDeleteOne after another it is giving us several news so that we ca easily fins many solution to solve our problems.So i really appreciate their hard working present to us in such a short time.
ReplyDeleteMonitors
The multibagger stocks can be a great idea to make money. There are a number of multibagger stocks that have gained high popularity in making money.
ReplyDelete