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kulman
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Joined: 02/Sep/2006
Location: India
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Posts: 9319
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   Topic: Zydus Wellness: Eat Healthy Stay Wealthy!
Posted: 21/Dec/2006 at 7:15am |
One needs to look at this small-cap stock called Carnation Nutra Analogue Foods Ltd
They make NUTRALITE, a healthier (cholesterol free, low fat)alternative to butter. More on Margarine can be accessed at their website. (under construction)
Cadilla Healthecare (Zydus group) bought major stake in this company (>60%) early this year. The original promoters seem to have exited.
I'm a satisfied consumer of their product since past 5-6 years. It is presently available in select supermarkets...it's getting popular. It's widely used by bakeries as a shortening agent. Organised retailing is likely to be a catalyst for high future growth. Cadilla's marketing & distribution strengths would definitely add lots of value.
There was an open offer from Cadilla @Rs.150. The stock is languishing around 70~80 range post-correction.
Equity: Rs. 5.57 Cr
FY06 EPS: Rs. 4.45
FY06 Sales: Rs. 30.91 Cr
FY06 NP: Rs.2.48 Cr
CMP: Rs. 77
Mkt Cap: Rs. 43 Cr
I request members to add their valuable comments/views...This could be case for "Buy-what-you-eat" theme...
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jack
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Joined: 28/Nov/2006
Location: Bahrain
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Posts: 25
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Posted: 21/Dec/2006 at 11:49am |
I use to see the people here in Bahrain where i am staying use to take margarine based stuff instead of butter in good nos. Here u can see lot of orgainsed retail shops selling these kind of foods and the people have become health conscious they take in good nos.
Once in India if we see this kind of orgainsied retail shops flourishing and selling more no. of health conscious foods, sure this nutralite will be a good hit.
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s_praharaj
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Joined: 10/Sep/2006
Location: India
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Posts: 357
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Posted: 22/Dec/2006 at 6:56pm |
Thanx Kulman,
After a long time in TED forum some new stock has come for discussion.
We all will try to get mor inf about the company.
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Shashi Praharaj
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nav_1996
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Posted: 22/Dec/2006 at 8:29am |
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I see aggressive ads of this product and it will definitely become popular. I myself wanted to use something similar but I did not know if something like this was available. Cadila has a target to push the sales to 100 cr in near future. But my only concern would be Cadila deciding to go for profitless growth to garner a dominant market share.
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basant
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Posted: 23/Dec/2006 at 9:18am |
The return ratios look very good. The company is also debt free and there is Rs 19 cash sitting on each stock that a person buys.ALso the net sales have shown a consistent increase except during Fy 06 where they increased by only 10%. This is a classic value stock and if we exclude the cash that sits on the books of the company the stock is available at a PE of just 12 times historical EPS.
WJHat would be interesting to see in carnation nutra is whether the management communication speaks anything about sales growth because from what I saw in the figures the company has an asset turnover of close to 5 times that means for each rupee worth of asset the company generates sales of Rs 5; presently the company has less then Rs 5 crores invested in net assets therefore the additional cash of close to Rs 10 crores that is sitting idle on the books can be used to triple sales without any further dilution.
Looks very good value and if growth could be generated the company could really grow multifold from these levels.
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kulman
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Posted: 23/Dec/2006 at 9:44am |
I agree with Nawendu's views that during intitial phase, bottomline growth may not match the topline growth due to aggressive marketing/advt spending.
During this financial year, a new imported machine has been installed for additional production capacity. Internal target of the company is to achieve 3 figure revenue in the next three years. Cadila's management is already proven one in their (pharma) field.
Though it may not be right way or the reason to invest, but FIIs hold approx 11%.
Basant jee, you've added another dimension to the analysis...asset-turnover ratio. Could you please elaborate on the same in lay-man's terms?
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basant
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Posted: 23/Dec/2006 at 9:56am |
It means that for each rupee of asset how much sales you can create. Generally this is used for evelauting manufacturing companies. FOr example if the total asset in your business is Rs 20 lacs and you are doing a sale of Rs 1 crore then we could say that by putting another asset of Rs 10 lacs you could generate adiitional sale of Rs 50 lacs. Generally higher the ratio better for the company
Now assume that this additional machinery generates a cash profit of 20% so this additional machinery wpould throw back Rs 10 lacs cash again into the business. That means the initial capital is now free!!!
I like using these ratios for retailing companies where the aset turnover is 10 times so an additional rupee invested creates Rs 10 worth of sales. It is also important to understand that the cash profit of retailing companies are in the range of 10% so that initial capital comes back after one year.
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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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kulman
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Posted: 23/Dec/2006 at 10:08am |
Thanks for that.
May I ask another basic question...what's working capital ratio and its relevance? Of course, the higher the ratio the better.
I read somewhere that for manufacturing industry it shall be more than 5. And as per my understanding the formula is first to add Number of days inventory (say 'x') & Number of days debtors (account receivables) (say 'y').
And then....working capital ratio = 365/(x+y)
Is it right?
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