Saturday, March 10, 2012




AgroTech Foods once   recommended @ Rs.327/- on November 6,2010.This is NOT  a BUY purely on conventional valuation parameters like P/E.In my old posting I clearly mentioned that the attitude of foreign management after the exit of ITC from this company will be the crucial point to watch.Based on some of the recent developments, I strongly feels that the parent company ConAgra Foods is now fully committed and trying their level best to take Agrotech Foods to the next stage of growth.In November 2011,foreign promoter hiked their stake to 52 % by purchasing ITC's remaining stake at a huge premium ( @ Rs.580) to the then prevailing market price.Last week AgroTech  announced its plans to start four new manufacturing facilities - 3 in India and 1 in Bangladesh in next three years at a cost of Rs.100 Cr.This step is a clear indication for company's plans to concentrate in growing Indian and other Asian markets going forward.Company's efforts to transform from a commodity player to a food company is also started to bring results  and it is evident from the margins posted in latest December quarter.It is expected to introduce many of the parent's brands in India in next few years. This MNC associate may not  be cheap at CMP of Rs.450/- as I mentioned above , but this premium will continue even in future considering its growth prospects,debt free balance sheet,parent company's status and its  brand value..etc. It is a stock to include in your core portfolio with  a long term view .

For the old posting Click HERE


  1. Dear Value
    your old reco Bajaj hindustan want to amalgate subsiday Bajaj Eco and Bajaj Aviation and call board on 13th march. Bajaj Eco is ok but what is Bajaj Aviation and is there any negative effect due to this amalgation?

  2. Dear Patidar

    Not expecting any significant impact due to the merger of Bajaj Aviation on two reasons.First of all it is a 100 % subsidiary of Bajaj Eco-Tec and no chance for equity expansion on this merger.Secondly this company having not much operations and posted a negligible loss of Rs.1.53 crore in last FY .So I think nothing important on the merger of Bajaj Aviation.

  3. Hi VAluepick,
    Its sales not growing at all. They have got poor margins. Parent ConAgro is not fast in introducing its prodcuts through subsidary AgroTech. Still it detrives majority of its revenue from bad business of edible oil. Why do u think suddenely thins will change I mean parent will introduce lot of products through subsidary agrotech, they will improve margin etc


    1. Dear Sameer

      How you can say its sales is not growing ?. Why you are not considering the fact that the company last year sold their 'Rath' brand and current turnover is excluding this ?. Moreover company in their last investor presentation clearly mentioned the strategy to reduce the % of edible oil turnover and plans to concentrate in food items.Brand building and other efforts are not possible in one day or two .I don't think a professionally managed company like ConAgra will introduce products in a hurry without proper market study.If you learn deep about Agrotech you can easily understand the strategy of this company.Try to read the investor presentations of parent company ,interview of MD of Agrotech ..etc to get a broader picture.

    2. Hi Valuepick,
      People have been invested on these expectaions for last 5-6 years(Damani chat days:). But tehy have not sone anything for taht. For example, its long time since they have introduced Pudding but its not succesful. I mean I found mgmt to be very passive. But u have posted about it so u may have seen new signals of turnaround.
      Best of Luck

    3. Hi sameer
      In last five to six years at least it doubled , so I think it is not a loss for an investor with patience.Introducing a product from its parent ,market it here ,build production capacity if and only if that product succeed here is the strategy of this company .I think this is the right way to reduce unnecessary expenses.I clearly mentioned the possible reason for not introducing more products in India aggressively in my old posting .

  4. dear valuepick,

    do you track geodesic ltd and if so pl comment

  5. Dear VP,

    what would you recommend on Picadelly Agro, once it was running like bull but in past few quarters its not moving at all. What would u suggest for near term say 6-8 months?


    1. Nothing to say about near term on sugar companies otherwise there is some policy announcements.But very much positive on long term prospects.

  6. Dear VP
    what one should do if he have some positions with 10 to 20 % profit before budget ,should he sell or remain on hold.

  7. Hi Value Sir,

    The current news of BIOCON-PFIZER deal getting over suddenly will be a setback for BIOCON? or will it be a good entry point to invest in BIOCON?



  8. Dear Sir

    Your view on "Biocon, Pfizer to scrap insulin deal"


  9. Yes it is a setback,may take some time to recover.

  10. Dear Sir,
    I have been watching your recommendation since last six month and most of these are impressive for long term point of view.
    I just want to know is it right time to buy Panacea Biotec, actually its number is not coming good. It can be turnaround story.
    Please advise.

    P. Singh

  11. Dear Singh

    Recent issues with WHO is a concern in the case of Panacea.

  12. Dear VP sir
    ur relentless beneficial & samaritan work for investors and socienty , really earns respect from readers like us.hats off to you.
    Would you give ur opinion on Opto circuits at current level?Seems tht company fundamentals are e=intact so is it buying opportunity now?

  13. I feel that FMCG stocks have already had a big run, and lot many of these will find difficult to give meaningful return because of excessive competition and high valuations. Do you also share my thought?


  14. Latest update as of 24th October 2012:

    Conference Call
    Agro Tech Foods
    Looking at ASP spend of 7% - 8% on long-term basis

    The company held its conference call for discussing Q2 FY13 results.

    Key highlights

    The net sales for Q2 FY13 has increased by 6% to Rs 192.28 crore. OPM has increased by 85 bps to 7.48%. The company has reported a net profit of Rs 9.24 crore, a rise of 16%.

    The company has seen improvement in gross margin and the food business contribution in Q2. Food contribution is up from 16% to 18%.

    Sundrop oil sales grew by 4%, ACT II up by 16% and Crystal up by 8%.

    Sundrop has seen a flattish kind of volume growth for Q2 and expects to see some growth in Q3 due to festive season. The mgmt said that for last 4 years, Sundrop is showing flattish type of growth in volume, as role of this brand is to grow the margin and profitability of the company.

    ACT II sales was up due to mixture of volume and trade up. The company's Rs 15 and Rs 20 price point has shown good response. ACT II large part of growth came from price. The mgmt is looking at 20% growth.

    The company now has got license to import corn and is working on documentary issues at present. It has not imported any corn in last 18 months and for last 18 months it was using corn from its inventory it has build up. For next 6 months it will import some corn and at the same time will also deplete its inventory. The mgmt said that the prices of corn have gone up significantly in last 18 months compared to when it brought last time and doesn't know now at what prices it will get corn. The mgmt added that as such it is unable to say anything on pricing front of the popcorn, but emphasis it will not compromise on gross margin, as it never want to enter in any product where gross margin is low.

    Peanut butter facility in Gujarat will come next fiscal. The work is underway for another facility near Kanpur.

    The company has acquired land in Bangladesh near Dhaka for setting up manufacturing facility. It will be small plant and manufacturing will start in next 6 to 8 months. Popcorn will be introduced in that market from that facility. It has tested the ready to eat popcorn and has received good response. As such, it will first introduce there ready to eat pop corn first and then ready to cook one. The mgmt said that beside Bangladesh, it has right to enter Nepal and Sri-Lanka, and will hit Sri- Lanka in near future before Nepal.

    The mgmt said after Bangladesh it is looking to setup facility in eastern part of the country.

    The company as on 30th September had 1600 fleet on street compared to 1300 at the end of the FY12. The focus of these sales people is on ACT II, but also help for push of other products.

    The company is today present in 375000 to 400000 stores.

    The mgmt is looking at ASP spend of 7% - 8% on long-term basis.



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