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Monday, October 25, 2010

Gujarat Ambuja Exports: Sept 2010 Result Review

The results of Gujarat Ambuja Exports for the Quarter ending Sept 2010 are out.

Highlights are:
1. Top line Sales growth on a year to year basis up 21.92%
2. Bottom line Net Profit growth on year-year(Y-Y) basis up 134.48%
3. Depreciation on Y-Y basis down 22.79% (which could mean that last year numbers were suppressed by increasing depreciation or this year numbers are being pumped up by decreasing depreciation)
Personally I feel last year numbers were depressed to keep stock price down for accumulation..
4. Interest payments are down 6.17% Y-Y (generally since GAEL does not have long term debt it could indicate easy interest rate terms or lower raw material holding cost.
Personally I think its easy interest rate terms cause GAEL is still increasing stock in trade/work in progress numbers for Sept 2010.
5. This is good on a segmented basis All divisions of GAEL, Cotton yarn, Maize and Other Agro processing divisions improved margins.. Windmill division had a drop in margin but would not be concerned as Windmills is not a large business and actually depends on wind patterns (out of control of GAEL management)
6. The Agro processing division is what made all the difference in GAEL topline and bottom line as margins have improved on Y-Y and specially on Q-Q basis since June 2010 margins were just 0.60%
I would say further improvement in margins should be expected maybe 1-2% even to match 2009 Full year margins of 5.22%

Conclusion: There is very little that has gone wrong with GAEL and results are really good.. having said that I think this is not a time to sell as results will continue to do well for the next 12 months.. I would suggest already invested individual to Hold on to their cheap stocks..
To those who are late in the party it is still a great price to get GAEL below 38 levels.. cause this was the buyback price set in 2007-2008 and GAEL is still very cheap.. considering the target price of 100+ in 12 months time frame.. price of 40,60 for GAEL is closer than you think.. once the ball starts rolling..

=happy investing

Previous Article: GAEL: Sept 2010: Shareholding Report Review
Next Article: GAEL: Promoter Guidance for Year 2010-2011


Purushottam said...

Great that we are in this stock. Future looks good.
Interview of CEO looks very good.


What'sUp Prahalad said...


This is from the horses mouth so.. it has a lot of value..

Thanks for the link I think I should make it an official link to the GAEL Blog data.

Yes I think 100 does not look so far off now...

Hold on to your cheap stocks!!

=happy investing

Anonymous said...

Hi Prahlad,
i think i should thank you from bottom of my heart.Though a late entrant,i have been devoid of any technical news and good analysis.I saw ur blog and they way u stood behind GAEL is just awesome.apart from this i ve been reading ur posts in Moneycontrol and even after so many negative thopughts floating around,the way u defended GAEL was the sole reason why i went behind GAEL.THough my holding is very limited(approx 500 shares) i still feel,its good enough.I have made losses in many stocks due to my lack of knowledge..however i took the decision on GAEL simply because of ur no-nonsense recommendation.How i wish i had come across ur blog a little earlier.

thanks again for ur wonderful opinion and as a v small investor,i feel i am indebted to you.may the knowledge that you share being immense happiness to you as well

God bless you.


What'sUp Prahalad said...


Thank you for your kind words..
Hang on to GAEL cause it will reach greater heights..

Promoters invest for returns greater than 300% and GAEL promoters were in till 35 levels.. you can easily expect 100+ in 12-18 months time frame..

Also look to invest in Jayant Agro Organics.. even at these levels.. (150) Jayant will be a multibagger for sure.. though stock price is high the stock actually is cheaper.. and has inherent strength because of being in castor derivatives space

=happy investing