For the past many years company reporting steady growth in its key business .See table below :
On an equity base of Rs.16 Cr ,In FY 2012-13 Company reported an EPS of Rs.7.34. In the latest June quarter Company reported a top line of Rs.110 Cr and a net profit of Rs.36 Cr as against Rs.96 Cr and Rs.26 Cr reported in the same period of last year. June quarter Result HERE - ( There is a calculation error in EPS calculation in the result where 2012 June quarter EPS indicated as Rs.38.54 instead of Rs.16.67 ,but profit figure is correct .EPS calculation on old equity causes for such an error) .EPS for this is June quarter is Rs .22.44 .One main point to note in the result of any seed company is ,about 90 % of sales of seed company’s are from first quarter and most probably the next three quarters will be in loss ( You will get a clear idea about this seasonal trend by checking the quarterly financials of JK Agrigenetics) . Here in this case March quarter result also provided by the company which is surprisingly in profit .What I mean is , annualising the performance only on the basis of June quarter result may give a wrong picture .Even after considering this fact ,I expect an EPS of Rs.9 -10 in this full year.Average P/E ratio of seed industry is 20 or above and this company’s P/E on expected FY 2014 EPS is still close to 5 which offering very huge valuation gap.
Its old share holders (IPO of Nath Seeds in 1994,de-merger to NBIL in 2004) may be not aware about the changes happened in the potential of its business during this 20 years.In addition to that they never got a chance to encash this stock during last 10 years .This may be the reason somebody sold this stock at a slump sale price on the initial days of listing .
These kind of value mismatch opportunities are rare in stock market and if we are not ready to utilise it with some risk on account of excuses like valuation of other companies under same management,delay in listing ..etc ,there is no meaning in remaining as a small cap investor in Indian Stock Market.As I mentioned above ,Since seed is a seasonal business reporting loss in all quarters except June quarter is a possibility but that is not a reason to sell this stock . Keep it for long term .
Link to Company Website HERE
Link to the latest issue of Company's in-house publication HERE