KRBL Ltd (KRBL) history dates backs to the year 1889 in Faisalabad, Pakistan where the company was found, but was incorporated in 1993 in Delhi, KRBL is the world’s largest Basmati rice exporting company with multi-brand presence both in domestic as well as overseas markets. Over the years, the company has developed rice brands such as India Gate, Nur Jahan, Telephone, Train, Unity and Bawabat Al-hind to meet the requirements of different categories of consumers. Being an integrated player, the company also deals in value added by-products like Bran Oil and De-oiled Cakes. It has got Energy business vertical as well, wherein it uses rice husks for captive power plant. Its energy portfolio comprises of Bio-Mass, Solar and Wind energy. KRBL has strong presence in export markets with 51 % market share of Basmati Rice market of USA, dominant presence in Middle East and expanding its export base to Africa and Europe. The KRBL is ISO 9002, HACCP (Hazard Analysis and Critical Control Points), KOSHER (approved by Jewish Dietary Law) and FDA (Food and Drug Administration) certified. The company KRBL follows backward integration through partnership with farmers wherein the company encourages contract farming, makes available with high yielding seeds and provides intensive training on crop cultivation. Thus, the company is fully integrated across supply chain which enables it to focus on quality of produce and which ultimately helps improve realization for KRBL, which is around Rs. 72 per kg, much above average industry realization of Rs. 53 per kg. Basmati rice contributes to 97.5 % of total agri business revenue. KRBL came out with the strategy of contract farming in Punjab, Haryana and Uttar Pradesh wherein the company provides high yielding seeds including PUSA 1509 seeds and intensive training on crop cultivation which has been of great help in augmenting and procuring better quality paddy along with enhancing its market share for seed business. The strategy has worked in favour of farmers as well with acreage under cultivation has increased substantially from 60,000 acres in 2005 to 240,000 acres in FY15. Backed by strategic marketing initiatives, the company has come up with 6,90,000 outlets spread across towns and cities in the country. It has strong tie-ups with several domestic retail chains including Food Bazaar, Spencers, D-Mart Reliance Retail, Vishal Mega Mart, More, Walmart, Easy Day, Reliance Cash & Carry, Metro Cash & Carry and in local E-commerce to steer growth for KRBL. In order to capitalize on opportunity in renewable energy, the company has set up Solar Power Plants and Wind Power Plants at different parts of the country. Solar Power plant of 15 MW is situated in Madhya Pradesh whereas Wind power plants of capacity 87.05 MW are situated in different parts of the country including Maharashtra (33.50MW), Rajasthan (11.85 MW), Tamil Nadu (8.10MW), Karnataka (11.10MW), Andhra Pradesh (10.50MW) and Madhya Pradesh (12.00 MW). Wind Mills of 20.1 MW will be commissioned in Maharashtra shortly. Thus, energy segment is showing signs of greater traction thereby ensuring diversified earnings for the company. Also company has set up a Furfuryl Alcohol plant in Bhasaur, Dhuri dist. Sangrur (Punjab), at a total cost of Rs. 7 Cr. The commercial production of this Furfuryl Alcohol is expected to start shortly. On financial side the consolidated revenue for the 2nd quarter stood at Rs. 732.98 Cr from Rs. 918.76 Cr, when compared with the prior year period. During the 2nd quarter, net profit increased by 13.78 % to Rs. 98.41 Cr from Rs. 86.49 Cr in the corresponding quarter ending of previous year. During the quarter, EBIDTA stood at Rs. 153.06 Cr as against Rs. 140.18 Cr in the corresponding period of the previous year. During the quarter, PBT stood at Rs. 124.91 Cr as against Rs. 116.91 Cr in the corresponding period of the previous year. EPS of the company stood at Rs. 4.18 in Q2 FY17 against Rs. 3.67 in Q2 FY16. For 6 month period of FY17, net profit of KRBL stood at Rs. 178.82 Cr as compared to Rs. 166.65 Cr for the 6 month period of previous financial year. In H1 FY17, Net sales stood at Rs. 1533.32 Cr as against to Rs. 1941.71 Cr in H1 FY16. Operating Profit & PAT of the company are expected to grow at a CAGR of 11 % and 14 % over 2015 to 2018E, respectively. KRBL’s Current ratio points to soundness of health of the company in terms of its ability to meet its short term financial obligation. Growth trend is likely to remain up on the back of constant rise in demand, about 29.5 % likely fall in sowing of basmati seeds which may result into fall in production and corresponding rise in price, growing Basmati rice consumption demand in Middle East, Persian Gulf, Africa, US and Europe. KRBL, with the help of its subsidiaries and with the highest rice milling capacities, is well placed to capitalize on growing demand. Amidst growing demand of basmati rice as staple diet-domestically as well as globally, KRBL with the credibility of being the largest player in domestic and export markets and with highest milling capacities is well placed to boost its revenue growth. KRBL enjoys great brand recall, on the back of quality basmati rice and years of experience at industry place which result into its products attracting premium price. Given the backdrop of rising demand for branded basmati rice globally and domestically with wide network of distribution, KRBL is better placed to capitalize on opportunities. At the current market price of Rs. 377.25, the stock is trading at a PE of 22.78 x FY17E and 20.31 x FY18E respectively. The company can post Earnings per share (EPS) of Rs. 16.56 in FY17E and Rs. 18.57 in FY18E. It is expected that the company’s surplus scenario is likely to continue for the next three years keeping its growth story in the coming quarters also.
|SALES (₹ Crs)||3,159.69||3,428.13||3,085.31||3,239.58|
|NET PROFIT (₹ Cr)||321.73||337.06||389.90||437.17|
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