Has anybody looked at Usher Agro?

        Jun05     Jun06     Jun07     Jun08     Jun09
Sales     33.11     38.48     69.60     141.24     209.10
EBITDA     3.35     3.78     7.18     18.87     27.11
I          1.24     1.38     1.77     1.95     5.37
Tax        0.62     0.32     0.85     2.87     4.78
PAT        0.98     1.62     3.88     12.64     14.85

1. Same industry as Lakshmi, largest player after him (current capacity is 0.25MMTPA)
2. consistent growth
3. fully funded to grow capacity to 1MTPA by end of next year.
4. present year target pat 24 (13 already done in H1) at present levels is trading at 4times current year and 6 times trailing

Any thoughts on this one?

Edited by iaditya - 07/Mar/2010 at 3:27pm

this is one of the stock named in the Nirmal Kotecha scam

Originally posted by iaditya lakshmi is trading at 9PE and usher at 6PE on a historical basis.

The investment argument in favour of usher looks attractive based on forward earnings but with these rice companies, lot depends upon monsoon and govt policy. So projection of earnings more than a few quarters should be taken with a pinch of salt.

Regarding Usher, does it have any value addition like lakshmi does while rice processing? If so it can be kept in watch.

Plus just as you mention some positives for Usher, lakshmi is entering retail packaged rice and wheat and flour business which would derisk its business model further. They also talk of coming out with some high quality healthy rice which would be beneficial for diabetics and other lifestyle diseases.

Even Usher is entering into power production. Last quarter they merged their power company (the one that was supposed to do an IPO) into itself.

Not sure about this healthy rice business for Usher, but they are surely into Pusa rice in a big way (the non basmati rice govt. has classified as basmati; and hence can be exported). What i think Usher is trying to do is instead of getting into retail, they are supplying private labels for Spencers, Reliance etc; not under their present brand name of Rasoi Raja.

But definitely Usher has much smaller power production capacity (15MW versus 30MW going to 90MW for Lakshmi). But this is a function of rice processing capacity really. Once it scales up production capacity of rice; power will come automatically.

@ Hit2710: Nice point on estimates of agro stocks. But ultimately if processing capacity is there; profit capacity is there. It may depend on the monsoon but if monsson comes there is large possibility of making profit.

One digression on govt policies: Unlike sugar which is cyclical; rice is not. It will remain as regulated as it is. with msp showing the same upward trend as it has shown for past many years.

Edited by iaditya - 13/Mar/2010 at 9:50am