Provided below are prima-facie updates rgdg. Robust Q1 results posted by Riddhi Siddhi Gluco Biols.
Materials include Interaction of Riddhi MD with CNBC TV18 ; my brief discussion rgdg. the reults with my fellow financial fraternity members ; reasons as to why now Base Price for trading of Riddhi Siddhi's shares on the bourses shifts upwards to Rs. 450 /- I will come out with detailed report on scenario for Riddhi after Q1 results soon. ------------Interaction with MD------------------------ Will meet Rs 1000 cr FY11 sales target: Riddhi Siddhi Gluco.. Jul 23, 2010 at 03.12 PM Riddhi Siddhi Gluco has come out with its first quarter results. Ganpatraj Chowdhary, MD, Riddhi Siddhi Gluco spoke about the company's first quarter performance to CNBC-TV18. Below is the edited transcript of Ganpatraj Chowdhary's interview on CNBC TV18. Q Riddhi Siddhi Gluco Biols has posted excellent Q1 FY11 numbers. Even FY10 was exceptionally good. Please take us through the numbers. A: We have begun the year on a very good not. Have very good utilization of all three manufacturing location. Have introduced new products with good margin. So have grown in turnover 30% up and so is our EBIDTA margin. Q: Why is your FY11 guidance lower? A: Normally is is better to be little conservative. But now we are hoping to revise our guidance. We will be able to increase our margin level from 15-16% to 17.5-18.5% in this year. Q: You indicated a topline growth of Rs 1000 crore. Is it a doable target in FY11? A. I repeat, we will definitely meet the sales target of Rs 1000 cr in the current financial year. Q. Has your expansion plans been completed? A; Yes. Fully completed Q. What's the capacity utilization? A: All plants are running at a 90% plus capacity. The currently commissioned plant (Pantnagar), we are sure we will get good contribution on our topline and bottomlin -----------------My Brief Discussion Rgdg. Results------------------------------- The Q1 results just announced by Riddhi are not atall an aberration. They are reality and if you closely look at the history of the company then these numbers can very well be called a certainity. I continuously stressed in my report and replies that time is ripe for Riddhi to reap the fruits of all the investments the company has done in last so many years. Let's first briefly discuss the results just announced : The revenue is up around 30 % YoY but has declined sequentially but this is the normal trend. NP that you see includes insurance claim of 2007 received now and deducting that, NP comes to around 27 odd crores which is 500 % jump YoY and 125 % jump sequentially. Still, even at 27 cr. this translates into start of an excellent trend of improving operational efficiences achieved by the company. This is due to two reasons, first sharp reduction in debtor days which means less pressure on managing working capital requirement. Second reason for this is that company has procured almost all the raw material requirement at a lower rate as company has the policy of procuring all the raw material between December and March and maize prices were under severe pressure in that period; hence company is benefiting from its strong internal policies and so you can see vast improvement in OPM and NPM. The results are surely on the positive side and has beaten the street by wide margins and one can expect significant rerating of the company in the near future. I will be coming out with detailed report on scenario after Q1FY11 results for Riddhi Siddhi soon. -------------------------Justification of Base Price of Riddhi shifting upwards to Rs. 450--------- There is an old saying that one should not extrapolate one qrtr. Results to other qrtrs. Performance. One is very right in his saying that it will be wrong to extrapolate one quarter performance to others but one fact everybody should remember is that earning in stock market is clearly the byproduct of near-to-correct projection of the things to come and for that you need to closely look at the history and precisely project the future. In that, although you can`t take 1st qrtr. performance as a benchmark for entire Fy projection but when, in a lean qrtr., company performs well then looking at its history you can easily say that in other qrtrs. it will perform better than the lean qrtr. Agreed, NPM might fluctuate qrtr. to qrtr. because of the change of product-mix as well as other parameters but the figure of NP that Riddhi has aceived in 1st qrtr. itself clearly suggests that FY11 will see a robust NP figure which will ultimately translate into retiring of some debt and provide financial muscle for sustainable future-growth of the company. The net profit figure (after deduction of extraordinary gains) of 27 cr. of Q1 is more than half of that reported in entire FY10 and this thing you can`t ignore. Now, evenif Riddhi reports modest NPM as reported in Q3 and Q4 of Fy10 then also you will see a NP figure of 70 cr. easily getting crossed in FY11 which will translate into an EPS of Rs. 60 + for FY11. To get to the other point of not benchmarking valaution on trailing PE, - with a certain EPS of Rs. 60 + for FY11 and the industry leader status which Riddhi enjoys, it can certainly not trade on a valuation which is at a discount to its smaller peers like Sukhjit, Gujarat Ambuja Exports, English Indian Clays or Universal Starch. All of Riddhi`s peers are historically trading at an average PE of between 7.5-9.5 and even Riddhi has historically traded between 7-8 PE. Hence, by applying a simple logic of an industry leader trading on par with its peers, if not at a premium, one can easily set a base price for Riddhi at around Rs. 450 which entails to a PE of just 7.5 based on conservative estimate of Rs. 60 EPS for Fy11. Any rate below Rs. 450 suggests undervaluation of Riddhi and so the word used is `base price`. In few months from now, one can easily see Riddhi stabilising at a price band between Rs. 430-500 and if Q2 performance is reported as robust as Q1 then no one can stop significant rerating of Riddhi in FY11 itself which might see Riddhi trade at a premium to all its peers which translates into a price which will be much higher than the base price. We have a multibagger in our hands. --------------------------------- Ends--------------------------------------- -- You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected]. 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