For the month of June 2013 total of 221 export shipments were done by Jayant agro and its 100% subsidiary "Ihsedu Agro Chem" .. Total FOB value was: 65.03Cr and Duty Drawbacks and Sales Tax Refund for June 2013 totals upto 81.16 lakhs
Ihsedu has large orders (by Value) which are of low value add.. while Jayant is exporting smaller FOB value shipments but of higher value add (higher margins)
here is a snapshot of export data Ihsedu..
Here is snapshot of Export data : Jayant Part 1:
Here is snapshot of Export data : Jayant Part 2:
I was also looking at old annual reports year 2000-2001
Jayant reported in year ending March 2001
Sales: 102.06cr
Net Profit: 12.10cr (Net Profit Margin: 11.85% Pls note zero taxes..)
even dividend payout was a cool 4.5cr in 2001
for year ending march 2013 Jayant reported
Sales: 1621cr
Net Profit: 36.24cr (Net Profit Margin: 2.23%)
dividend payout: 3.375cr (less than what was paid in 2001..)
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clearly when sales were just 100cr Jayant was reporting over 11% profit margin.. now with 1600cr sales profit margins have dwindled down to 2.23% ..
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Conclusion: My personal opinion is Jayant has been under reporting profits.. to grow in size without attracting any serious competition..
There is also enough room for a substantial increase in dividend payout.. and increase in stock price as margin improvement is reported.. A real hidden gem..
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11 comments:
WhatsUP Ji,
At macro level, there are these two conflicting scenarios:
1. Looking at EU etc, there is this economic uncertainty.
2. Falling value of INR is a boon for export driven business like JAOL.
I follow lots of contrarian financial sites and the general theme is, days of easy money, super growths, speculation and bubbles are getting over. Funds like Pimco are rearranging their investments into either bonds or stable businesses. A similar approach may be followed in India. GAEL & JAOL are stable businesses who were somehow untouched by speculators. Might see some interest.
Anonymous ji:
the fact is at any point of time.. there are atleast 2 options available for world..
If the world feels .. easy money is over.. its quite possible easy money will actually start..
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In the recent post "Looking through the haze I had a table
http://3.bp.blogspot.com/-zzMBvDOnb8I/UcNu29zPfqI/AAAAAAAAAs4/6Xc1KUU6Hog/s1600/FEDMoneyInSystemJune2013.png
this table shows that the US banking system has : As of May 2013 1.8 trillion US dollar of "excess reserves with the FED."
US financial system as of May 2013 is just 1.29 Trillion.
====================
So as interest rates rise .. the excess 1.8 trillion which is getting 0.20%(for eg) return from the FED.. in an increasing interest rate scenario..might be encouraged to move from FED excess reserve bucket .. into the financial system
this move of excess reserves of the banks from the fed into the financial system will flood the financial system with tonnes of money..
and fed has no control over their movement..
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I will say there is a big possibility that speculation /volatility will increase going forward.. as this new money floods the system..
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gael/jayant first are very very cheap with minimum downside.. as they are valued at steep discount..
No need to fear fall in value as they are already rock bottom.. and in stable businesses..
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=happy investing
whatsup-indianstockideas.blogspot.com
WhatsUP Ji,
Please see this:
Interestingly enough, GAEL is becoming one the largest players in Maize wet grinding in India (1750 TPD plus another 750 TPD in pipeline). The product of interest is Corn Starch used in bio-plastics.
http://eng.castor-oils.com/News/226333.htm
Anonymous ji:
this is all being driven by the EU legislation REACH (and similar legislation in US, Japan and other countries..)
corn starch based plastics are great but most likely the technology is guarded and will not be available for others(like gael).. the reason corn is getting so much research is because its widely grown in america.. and available cheap..
castor oil based plastics are high performance plastics used in automotive parts and oil drilling where the plastics are exposed to highly corrosive environment..
corn as mentioned will be used for large scale low end products like bags and sheets..
gael is definitely worth buying at these levels..
As mentioned before GAEL with its cost effective manufacturing is going to drive a number of corn starch players off the market..
=happy investing
whatsup-indianstockideas.blogspot.com
Dear Prahalad,
Your view suggest that Jayant is under reporting its profit. What happens to the rea money made out of profits then. Is it siphoned out? Or I have read a scenario where the pubic company sells goods at a very low margin to binami promoter owned companies which in turn makes a killing profit leaving behind the share holders of the parent public company with paltry returns. Pls don't treat it as negative comment but a probing question.
km ji:
nodoubt Jayant is under reporting profits.
It is also carry-forwarding its export incentives for a number of years..
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looking at related party disclosure (2012 AR)
enlite chemical industries.. bought 44.23cr of raw material
enlite chemical industries sold 48.24cr of goods to jayant agro and its subsidiaries..
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this is the only significant number..
promoters should give details of raw material sold(quantity) and bought (quantity) from enlite chemical
I checked could not find any info about enlite chemical industries anywhere..
this(enlite) only seems to the black box..
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companies do try and put best foot forward in the initial years of going public.. but still current profit margins are very very low to be a realistic number..
=happy investing
whatsup-indianstockideas.blogspot.com
km ji:
just saw todays (july 3,2013 FOB data)..
Ihsedu agro exported one shipment of 15.64cr to france from Kandla port..
(I guess to arkema)
=happy investing
whatsup-indianstockideas.blogspot.com
Dear Prahalad,
Thanks for your feedback. My humble opinion about management integrity is that they should be transparent whether it is positive or negative numbers. One who can mis-project positive numbers can also mis-project negative numbers . This is worrying me a bit.
Anyhow we can't expect every company to be as honest as HDFC or Infosys.
km ji:
nodoubt management not being transparent is not good.. but having said that..
management has increased shareholding by 10% in past 5 yrs and are doing all the right moves..
good jv's with japanese and french multinationals .. giving it an edge over other indian/chinese companies..
I think we have a great story.. just that we donot know when the value will be unlocked..
if and when value unlocking happens it will be a multibagger..
=happy investing
whatsup-indianstockideas.blogspot.com
WhatsUP Ji,
Interesting article / discourse from a value investor:
http://www.moneycontrol.com/news/market-edge/ace-value-investor-sampat-sees-comingeconomic-storm_913159.html?google_editors_picks=true
Anonymous ji:
personally I have moved from mumbai to dehradun (my native place)
stay in a farmhouse 40km from city..
problems at local level is:
- power supply is erratic.. (even though I am staying stone throw away from a hydro power plant..)
- chicken/egg prices are set from delhi so its not cheaper..
- food/vegetable market prices are cheaper in delhi or dehradun.. due to small market and inconsistent
demand in villages/towns..(local produce is cheap during season)
- there are no young farmers.. people are always looking for desk/office jobs and farmers are atleast 60+
- LPG cylinder prices are rising and new restrictions of just 9 cylinders for a family is just not sufficient.. (atleast 12 cylinders should be provided..)
- labour is not cheap .. even though people are unemployed .. schemes like NREGA ensure labour rates are high..
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Conclusion: We will experience a difficult transition.. as energy intensive industrial complexes collapse.. demand drops..
I hope gael/jayant start delivering returns to shareholders with increased dividend payout..instead of just expanding with their free cash.. as soon we are going to see a major demand collapse due to rising cost of basic necessities and food..
=happy investing
whatsup-indianstockideas.blogspot.com
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