Smruthi Organics : A humble grower
Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=3021
Printed Date: 21/Apr/2025 at 12:24pm
Topic: Smruthi Organics : A humble grower
Posted By: subu76
Subject: Smruthi Organics : A humble grower
Date Posted: 06/Oct/2010 at 11:56pm
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Mkt Cap - 60 cr. PE - 10
Smruthi is an API manufacturer.
It is basically a story of a company which seems to be at an inflection point. The company's fortunes changed when it's facilities got approved by US FDA and EU authorities in 2007. Ever since the company filed multiple DMFs and has more in the works. It also got long term (5 year) contracts from large pharma companies. I thought D/E is not a concern since it has loads of free cash flow. No big capex is extimated since it uses only roughly 60% of it's existing capacity. Some amount of rennovation is required which costs about 3-4 cr a year. Overall improving sales is having a huge impact on the bottom line. 1. The company mentions that commercial supply is beginning on a few contracts this year. Overall, i thought if they maintain a growth velocity of around 25% then it can Dividends also seems to have significant upside since the overall cash payed out |
Replies:
Posted By: venkym2000
Date Posted: 06/Oct/2010 at 8:27am
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Hi Subu, For me with little knowledge, it looks cheap based on Market Cap to sales and ROCE. Any idea on management quality? |
Posted By: prabhakarkudva
Date Posted: 06/Oct/2010 at 8:52am
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Just had a look at the numbers.One query,on a net profit + depreciation of about 9 cr in FY10 they have reported a cash flow from operations of 21 cr.How is that?
Have not gone through the AR,what am i missing? ------------- Take your chances and keep them in a box until a quieter time. |
Posted By: master
Date Posted: 07/Oct/2010 at 9:17pm
Haven't looked at this company. But it could be so for many reasons under indirect method, such as effect of adjustments for (i) increase in sundry debtors (ii) decrease in inventories (iii) decrease in sundry creditors (iv) proceeds from extraordinary settlements, etc. ------------- Someone’s sitting in shade today because someone planted a tree long time ago. |
Posted By: subu76
Date Posted: 07/Oct/2010 at 10:09pm
From the AR:
PBT + dep + Misc expenditure written off + interest expense - interest income =
725.49 + 382 + 16 + 4.27 - 427 = 1504 (lakhs) = operating profit before working capital changes.
working capital changes + operating profit before working capital changes = 23
- income tax = 21
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Posted By: subu76
Date Posted: 07/Oct/2010 at 10:10pm
From what I can see from the ARs the management seem to implement what it promises. Seems the business will see better days
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Posted By: chimak10
Date Posted: 27/Oct/2010 at 5:03pm
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Smruthi this little girl did well
Q2 EPS --------------- 5.91 Vs 4.92 Half year EPS --------------- 12.43 Vs 5.89 Half year Sales cr--------- 79.56 Vs 58.22 |
Posted By: subu76
Date Posted: 05/Nov/2010 at 11:05am
| Also noticed that the promoter holding is up from from 56 to 65 over the last 1 year. |
Posted By: subu76
Date Posted: 05/Nov/2010 at 11:20am
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Report from HDFC securities... http://test.hdfcsec.com/CMT/Upload/ArticleAttachments/Smruthi%20Organics%20Ltd%20Stock%20Note_27112009.pdf - Link
A relatively shoddy report with lot of copy pastes from annual reports etc...overall it seems like a hurried job with a standard template being used
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Posted By: SimpleInv
Date Posted: 06/Nov/2010 at 5:28pm
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deb to equity is 2+ ?
http://www.edelweiss.in/company/Smruthi-Organics-Ltd.html |
Posted By: subu76
Date Posted: 06/Nov/2010 at 5:37pm
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This is what i noticed about the company.
It payed back 12 cr of debt last year. The company has about 30 cr of debt on Mar 10.
Interest payments over the last 6 months is 2 cr roughly. It has cash flow from operations of 10cr-20 cr so is in a pretty good position to pay back interests. The company does not have major maintenance capex requirements. It has 5 years contracts in place. Overall, it seemed like the chances of bankruptcy is reasonably low.
Lemme know what you think. It seems to me that the most important challenges that a small B2B company faces (getting loans, setting up infra, winning contracts from biggies etc) has been solved and now it's mostly about the management executing and operating levearge kicking in since the base is pretty small at this point.
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Posted By: subu76
Date Posted: 23/Jan/2011 at 7:41am
| A new site has got FDA approval to manufacture and export APIs |
Posted By: srisaurabh2000
Date Posted: 16/Feb/2011 at 12:16pm
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Subu,
In case you haven't seen this - http://www.moneycontrol.com/news_html_files/news_attachment/2011/Smruthi_Organics_Sunidhi_150211.pdf - http://www.moneycontrol.com/news_html_files/news_attachment/2011/Smruthi_Organics_Sunidhi_150211.pdf
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Posted By: subu76
Date Posted: 16/Feb/2011 at 7:49am
Thanks Saurabh.... 
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