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Wednesday, December 01, 2010

Gujarat Ambuja Exports: Dalal Street Journal Article...

The latest Edition of Dalal Street Journal (DSJ) Dated: Dec 5,2010 has 1 page article on Gujarat Ambuja Exports. It is part of a featured article on Gujarat State as the ultimate investment destination. Gujarat Ambuja Exports has been selected as a representative company to portray the great investment opportunities in Gujarat.

There is also a 1 page Advertisement by Gujarat Ambuja Exports. The advertisement states that Gujarat Ambuja Exports is a well diversified yet focussed company. Sept 30,2010 quarterly results are:
EPS: 1.67 per share, Turnover up 27.07% and PAT up 145%

The company MD Mr Manish Gupta has been interviewed by DSJ wherein Mr Manish Gujta has stated the various segments for GAEL i.e. Solvent Extraction, Edible Oil Refining, Starch and derivatives and cotton yarn segment.

Agro Processing Segment: Mr Gupta has also stated that the agricultural output of the country will be good due to good monsoon and soy production is going to be 1Cr tonnes instead of 97 lakh tonnes last year. Soy meal exports prices are stable and hence soybean meal exports will be profitable (+ve parity) The edible oil market in India is also growing strong at 4.4%.

Cotton Yarn Segment: Cotton yarn segment is reporting bullish market conditions.. in-spite of increasing cotton prices.

Corn Starch Segment: Corn prices have been stable, margins are good and continue to be good demand. Due to increase in demand of Corn starch derivatives corn prices are stable but will be trending up. Corn starch derivatives are user industries are: Consumer Goods, Pharmaceuticals, Confectionaries, Breweries.

All segments of operations are having positive encouraging outlook. Corn derivatives and textile yarn segments will have consistent demand higher than supply. Agro processing division is going to have a steady demand in the near future.

Mr Gupta expects all segments to perform on the expected lines during the remaining period of the year. Since Q3 and Q4 are the best performing period for the seasonal period so GAEL will easily report higher turnover and profits for the remaining 2 Quarters .. and this is a conservative statement.

Revenue Mix: 50% agro processing, 30% maize processing, 20% cotton yarn processing

Fund raising Plans: All capital expenditure would be met from internal accruals. It has been company policy to have lowest possible long term debt for future expansion.

Outlook for India Inc: Govt is making all efforts to maintain 9% growth in GDP. Feel good factor across the globe for India is quite positive.

Is there Better demand due to good monsoon: Good monsoon has helped increase demand in various sectors of the economy.. specially soy de-oiled cake and soybean oil.

Conclusion: The company management as always has been modest about the prospects of GAEL with a controlled +ve bias statement in DSJ interview. The management also has maintained good fiscal prudence by keeping very low debt (only 18Cr Long term debt as per March 2010 Annual Report) and continue to keep their eye on financial wellbeing of GAEL which is very good for long term investors. The largest reported segment of GAEL i.e. Agro processing division which is responsible for 50% of all revenues is going to have a good positive margin for this year 2010-2011. We are also aware of new Maize processing plant capacity being setup in Karnataka which is the largest Maize growing state in India so future prospects are good as company is increasing capacity in higher margin maize processing/derivatives segment which will also reduce volatility in earnings. As always GAEL is an agro processing story which will deliver great results for investors due to their focussed approach and fiscal prudence.. Its really surprising why there is such low institutional presence in GAEL stock

Previous Article: Gujarat Ambuja Exports: Promoter Guidance for 2010-2011


Arun said...


1) Can you give me the link for GAEL`s annual report
2) Do you believe Accentia technologies is a good buy

What'sUp Prahalad said...


you sure have'nt really looked through my blog .. cause there is a ton of data about GAEL .. Link is in the right hand side of the page "Gujarat Ambuja Exports"

here is the link.. just in case..

=happy investing

Purushottam said...

Promoter is buying once again..
Buy when everyone is in fear and you are greedy.. and sell when everyone is greedy and you are in fear.


What'sUp Prahalad said...


As always.. Thanks for the info..

Its so good to see how proactive people are with regards to their investment and are tracking it..

By the way what is your target for GAEL? Personally 900Cr Market Cap should be achievable without any improvement in results..

If GAEL does have improved results we could see much higher targets.. 100 per share I think is a fair price leaving some money on the table for those who buy the stock.. from us at 100 ;-)

=happy investing

Purushottam said...

Prahalad: I agree with you 100 should be our target.
It is good that we always have some action in GAEL...

we should note that when promoter sells stake he might be doing it for hundred reasons(like he requires money to build house,vacation,etc).. but when promoter buys there is only one reason for buying.. He buys because he thinks the stock is going to go up..
Also we should give more weight when someone in company who is at VP or equivalent position buying... It is always good to see a person getting RS 40000 as salary investing 25000 in stock.. it indicates only one thing the business is doing good..
and going forward will do more good...
Just thoughts i got when reading peter Lynch book... Just wanted to share..

What'sUp Prahalad said...


One up on Wall Street..

I guess we should write "One Up of Dalal Street"

Another thing Peter Lynch talks about is Public Sector dis-investing.. (Govt IPO will always benefit public investors because the govt needs to be re-elected by the public.. )

Also when the public sector bank comes with an IPO.. the IPO Money goes to the bank..increasing the banks networth .. hence it always makes sense to invest in Bank IPO (Publi Sector banks that is..)

=happy investing