IFB Agro: Value Buy

Financials:
Market Cap: 64.5Cr
Current Market Price: 80.55
Sales March TTM (Twelve Trailing Months): 298.4Cr
Gross Profit TTM: 24.4Cr
Interest TTM: 1.66Cr
Taxes TTM: 4.77Cr
Net Profit TTM: 9.36Cr
Debt March 2009: 12.34Cr
Cash Flow from Operating Activities March 2009: 26.13Cr
Return on Capital Employed March 2009: 28.35%
Promoter shareholding: 55.20%
Divident: No divident payout in past

Overview: IFB Agro is part of the IFB group which has interest in consumer durables. IFB Washing machines, Microwave ovens.
IFB Agro is part of the IFB group with 2 divisions: 1. Alcohol & 2. Marine Food.

Alcohol division has a grain based (60,000 liters per day) and Molasses based (60,000 liters per day) distillery. The grain based  distillery has been recently setup (2009) and has captive power and also confirms to zero discharge norms. CO2 gas generated from the distillery is being processed to produce food grade and industrial grade CO2 and Dry Ice. Molasses based distillery has been running below capacity due to high volatility in price of molasses. Company produces country and IMFL (Indian Made Foreign Liquor).

Marine Division: Marine division is mainly exporting Prawns to USA, Europe, Japan, Australia & South Africa. The marine exports business suffered a setback as export license was cancelled/expired.
The marine division is also selling ready to cook prawns "IFB Royal Prawns" in metro cities (Delhi, Mumbai, Kolkota, Hyderabad, Bangalore)

10 year Performance history:

Conclusion:
Promoters have recently given a rights issue increasing equity capital from 7.71Cr to 8.01Cr
The rights issue was done to promoters only at a price of: 67/= per share. As can be seen the debt has reduced substancially and ROCE is also rising sharply. Company is turning more professional with Emloyee Stock options being issued. The fact that Marine export license got cancelled/expired does raise questions on management quality.

IFB agro with a market cap of just 64.5Cr, Debt 12.34Cr, Sales of 300Cr, Gross Profit of 24.4Cr & ROCE of 28.35% looks to be a value investment at these levels. Once can have a short term (1 year)  price target of  97Cr (Market price of 120/= per share) long term as the company turns investor friendly we can expect Market Cap of close to 1 times sales. The only fact that brings down the investment quaity of IFB Agro is... No divident payout policy of the promoters.