Saturday, September 28, 2013

R J BIO-TECH LTD -- UNKNOWN PROMOTERS BUT UNLIMITED POTENTIAL








RJ Bio-tech is a newly listed company in Indian Stock Market .This stock listed in BSE’s SME platform on last Thursday.This is a pure play seed company listed in BSE after a gap of five years.Even if the size of company is small at present ,potential of the industry and the consistent growth it reporting since inception deserves a close look.RJB belongs to Aurangabad based RJ group having business interests in Agri and Hatchery related fields. This is the first listed company from this group  . RJB producing a wide variety of seeds broadly classified into three categories – Vegetable seeds,Field Crops and Oil seed crops.
In each category ,company selling large variety of seeds like Cotton,Mustard,Sunflower,Wheat,Maize,Paddy,Bajra,Brinjal,Melons,Okra,Chilly,
Tomato,Cucumber,Onion,Spinach,Beans,Gourds..etc. ( For complete product list Click HERE ) .Such kind of a diversified portfolio not offered even by some front line seed companies in India.This much products helping the company to operate across different states in India according to the requirement of regional farming needs and preferences.Company claiming that they have  already established a strong production, storage and marketing network across 10 states consisting of R&D lab,farm area of 55 acres for R&D experiments,700 seed growers and 3 seed processing facilities with an installed capacity of 14 MT per hour ,9 product testing points,40000 square feet storage facilities...etc. Company’s R&D facility at Pharola got the approval of Department of Scientific and Industrial Research,Government of India.RJB selling its products through more than 1000 dealers in these 10 states.Company effectively leveraging the marketing network  of  group company – Maruti Fertochem (production capacity  1,27,000 MT per annum ) -which is operating in fertiliser segment .RJB tied up with Mahyco Monsanto for its Bollgard II BT cotton variety and the product developed through this technology  will be commercialised during the kharif season of 2014.Company entered into a marketing tie-up with Monsanto Holdings for marketing their Maize Hybrids.RJB signed an MOU with Directorate of  Rice Research ( DRR) Hyderabad for commercialising Hybrid paddy developed by DRR across India which will happen in 2014-15 


                                                      It is evident from the listing of this company in BSE SME that the current size of operations are small.But company established a good frame work in past few years and now it need to capitalise on that.It established a good infrastructure even though many of them are on a lease basis due to scarcity of working capital.Now the money raised through this IPO is proposed to be utilised mainly for working capital requirements. Even the size is small RJB is reporting steady growth since the beginning,which reported a CAGR of 78% in Sales from 2007-2008 to 2011-2012 and a CAGR of 110% in net profit in the same period. Its sales grow from mere Rs.90 lakhs in 2008 to Rs.16 Cr in 2012 and net profit shot up from Rs.1 lakhs to Rs.55 lakhs. Even its cash flow is negative at present,I hope it can be addressed  if the promoters can show more professionalism going forward.

                                                                                       The potential of Seed Industry is robust in India .Any company needs minimum 4-5 years to commercialise a new variety of seed from R&D level after going through long experiments,assessment and approval from various government authorities ..etc.On this background company’s portfolio of 55 type hybrid seeds in 8 field crops and 16 vegetable crops is not a small thing.As I mentioned earlier If the promoters can capitalise the infrastructure they built and tap the potential of the Industry ,RJ Biotech may bring good reap to its investors.Stock is currently trading in BSE ( Scrip Code- 536456) under MT group .As per new listing norms ,stock will come out of  trade to trade segment  after the completion of 10 trading sessions .Current Market price is Rs.23 

Link to company website HERE



 
 



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* Since it is a newly listed company , gathering information was not very easy .So some data taken directly from company  published documents . So it may be biased.


38 comments :

  1. their is no volume in rjbio,and what is your view on deccan gold,acrysil India?

    ReplyDelete
    Replies
    1. There should be a market maker for any SME scrip for the first three years.

      Not positive on Deccan Gold

      Positive on Acrysil

      Delete
  2. THis will be another camson biotech, useless pick ! we all thought camson also had unlimited potential, now see what happened, kaveri also not going up despite superb monsoon

    ReplyDelete
    Replies
    1. Issue of Camson Biotech is suspicious accounting practices

      In case of Kaveri seed ,I am not sure what kind of return you are expecting from stock market ? .KSCL given 350% return in last two years .For the first six months of this year itself (from last year's closing rate) it already returned 15% at CMP and more than 30% at YH rate !!


      Delete
  3. Hello VP,

    Nilkamal Ltd. - The qrtly results are good and June qrtr was better than Mar Qrtr results yet the price has gone down quite a lot. Any other reason? I could not find any reason like IT raid or pledging.

    ReplyDelete
    Replies
    1. Its falling topline is the real concern

      Delete
  4. Hi VP

    Was 'Not positive' a casual remark on Deccan Gold Mines based on your old understanding or you have seen all the recent developments around it. ML is in the last stage of approval, GMSI is proposed to be taken over and off late this counter has hit few Upper cicuits and ruling near its 52 weeks high

    regards
    SN

    ReplyDelete
    Replies
    1. If everything is so bright why the promoters of Deccan Gold is reducing their own stake in each and every quarter even at this cheap market cap ?

      Delete
    2. Hi VP

      I pulled out last 4 years promoter's holding data and here it is

      June2010: 2,68,68,281
      June2011: 2,60,41,218
      June2012: 2,56,00,757
      June2014: 2,53,01,023

      So in last 4 years promoter's holding is down from 2.68 Cr to 2.53 Cr shares. Is that a significant change to have a doubt on promoter's intent especially knowing that Rama mines (promoter's group) is actually a consortium of people/funds. In such a consortium it's possible that few funds take investment off the table in a SIP mode. I don't want to challenge your judgement but simply want to understand if this factor is significant enough to overlook some of the positives around this counter. Some of the developments esp those which relates to the government authorities can't be faked, for ex. ML application to ministry of mines whose status currently on MoM site is "Under process with MoM". The land acquision for the Ganjaur site is also for real. With due respect to your knack of spotting gems, I want to hear once again from you if you still hold the same opinion that DGML should be avoided.

      Regards

      SN

      Delete
  5. Dear sir,

    Is this the right time to accumulate Yes Bank?

    ReplyDelete
    Replies
    1. For the past few months stock is showing extreme volatility ,use only SIP mode .

      Delete
  6. Sir, was not able to buy RJ bio-tech in the T2T segment. Any idea why happens? My order was in the pending mode and expired after 3:30pm. Please advise.

    ReplyDelete
    Replies
    1. There was no sellers in this stock for the past few days ,T2T is not the reason.It will come out of T group after the completion of 10 trading days post listing as per the new rule.

      Delete
  7. Hi,

    What is your current view on Orient bell. I remember you had recommended bell ceramics a few months back. Since then the stock must have fallen 50%. I want to know if there is any change in the view and if it is still buy and hold in your books.

    Thanks,

    ReplyDelete
    Replies
    1. No change in the view on Orient bell as a company.But the entire sector not supported by rate cuts as expected earlier .

      Delete
  8. Dear vp sir, on ur reco, I had bought ashapura at 42.6 and later added more on ur repeat recp, but sir its continuously falling !! Now what shall I do ? Any negative news ? Hold/add or sell ?

    plz guide me, as I have invested heavily on ur repeat reco at 39 level

    ReplyDelete
    Replies
    1. Don't buy any share only due to my recommendation .Buy it only you have conviction in the company.Still I believe nothing has happened in Ashapura and it become more attractive due to rupee depreciation since its majority of Income coming from export.

      Delete
  9. Sir,
    your long time follower and query on Heritage foods.

    You see value in Heritage foods at current levels? I remember you mentioned of it being in 4 digits some time back. It had already reached 500+ levels and after bonus available at 200.
    Currently the company comissioned a new solar plant which will save energy.

    Regards

    ReplyDelete
    Replies
    1. Due to Heritage's political connection .Stock may show volatility in next 6-9 months.

      Delete
  10. Hi Sir, Whats your view on Technofab Engg at CMP ?

    ReplyDelete
    Replies
    1. Technofab included in periodic call which may affect its valuation.

      Delete
  11. Dear VP,

    What is your view on Kale now? Thanks to your foresight, it has appreciated sharply in the last one year but is it still a good buy at the present levels? Also, your view on Heritage and La Oppala (for someone who hasn't invested in these companies and would like to buy fresh equity). Thank you so much!

    ReplyDelete
    Replies
    1. As you know entry price is the main factor deciding gains in stock market.Kale appreciated from the recommended level of Rs.126 to Rs.640 ,laopala from Rs.76 to 480 ..etc. So for an average risk taker an entryat current level may be bit risky though we can't rule out further upside.

      Delete
  12. Dear Sir, is it good time to enter into "Schneider Electric" @cmp 58?
    Pls advise. You recomended this long teme back, so what's your current opinion?
    - Amit Toala

    ReplyDelete
    Replies
    1. the entire sector is going through some bad times. No need to hurry if you haven't a very long term view.

      Delete
  13. Dear vp sir,

    Wockhardt is going down & down further any new problems or the same which you had mentioned, i am a risky investor shall is go for it now.

    ReplyDelete
  14. wockhardt is down 20% since u recommended, is it a stronger buy now, or avoid ?

    ReplyDelete
    Replies
    1. Wockhardt not recommended, but explained the current situation.Decision depends on your risk profile.

      Delete
  15. Hello sir I have been following your blog for a the last few years...Thanks for the wonderful work ... May i know your view on AK Capital Services ? Thanks

    ReplyDelete
  16. Dear sir,Is this the right time to buy VST Tillers Tractors Ltd ?

    ReplyDelete
  17. sir i loosed heavily in themis medicare any stk to recover some losses ?

    ReplyDelete
    Replies
    1. Stock included in PCA ,hence the investors interest is low as in the case of every stock included in PCA.Recently company tied up with Novartis for a marketing alliance which is positive on the business side.

      Delete
  18. Sir i am not able to buy RJ bio tech i think 10 trading session over

    ReplyDelete
  19. Sir,

    Is it good to buy RJ Biotech for long term? Please suggest..

    Thank You


    Akash

    ReplyDelete

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