Key Takeaways from the concall :

(1) Crax Corn Rings contributed 80 % to FY14 revenues – a YoY growth of 11.3 %

Namkeens contributed 12 % -- flat YoY

Natkhat contributed 5 % -- a YoY growth of 163 %

Krunchoids contributed 3 % to FY14 revenues.

(2) Retail Outlet reach has increased to 2,20,000 from FY13's 1,96,000.

(3) Gross debt as at 31^st March 2014 is at 41 cr.. Debt repayment schedule is 12 cr. p.a.

(4) ICD is fully repaid and 14 cr. are parked as 'Current Investments'.

(5) Company has launched 'Natkhat' in Rs. 5 pack during the quarter and expects to increase its focus on this product line in FY15. New variants are planned to be launched in 'Natkhat' as well as 'Corn Rings' this fiscal.

(6) Krunchoids sales were below expectation and company is looking at fixing the gaps and relaunching the product line this fiscal.

(7) Next round of CAPEX will be planned depending on the sales growth this fiscal.

(8) Company is running at 78 % utilisation level in its existing capacities.

(9) EBITDA margin improvement can be expected starting FY15.

View post Concall :

If we read between the lines, then, company management has set for itself two choices – first, if sales pick up and go to historical 20 % + YoY levels then it will go for geographical manufacturing expansion – whereas – if sales show modest 15-20 % YoY growth then it will go for expansion at its existing plant at Noida in the current fiscal. As mentioned in our recent note too, competitive intensity is increasing in the segment but channel checks suggests good brand pull for 'CRAX Corn Rings'. As was evident from the channel checks, Krunchoids was almost out of shelves during Q4FY14 and management's commentary of below expected response to the product concurs with that. However, we feel Krunchoids is not a major setback as every new product takes its time to get accepted in the marketplace. Good thing is that management accepts the failure and is proactive in taking corrective steps. This approach will yield good results in long run.

Management seems to be working on new products and we can expect couple of launches this fiscal. Its the response to these products that will drive next phase of expansion for the company. Management seems to be playing safe and doesn't want to burden its balance sheet.

Based on recently declared results and management commentary post results, there might be short term negative reaction in the market but at just 1.2 times EV/Sales (FY14) and 13.9 times EV/EBITDA, every dip will offer an opportunity to accumulate the stock for the long term.

Discl .- Hold & looking to accumulate on dips.