Future Consumer Ltd. – Bright Future Ahead

Company Profile:

Future Consumer Ltd (FCL) is a Kishor Biyani (Big Bazaar fame) company. The company is procuring products from the farmers and villages, sorting it, cleaning it, grading it and packing it and selling through their network. It is a food & FMCG company, which is engaged in branding, marketing, sourcing, manufacturing and distribution of fast moving consumer goods, food and processed food products through retail chain Big Bazaar, Easy Day and Nilgiris.

It has a large number of product portfolio includes product categories, such as basic foods, ready to eat meals, snacks, frozen and processed food products, beverages, personal care and home care under its own portfolio of brands. It has also commenced its operations for marketing and distribution of oats and oats-based cereal products in India through its subsidiary company at Sri Lanka. (For know all product details, please read annual report of the FCL)

Company Financials: (Annual, Rs. In Crores)

Particulars	Mar 2015	Mar 2016	Mar 2017
Sales	1,082.55	1,343.80	1645.00
Operating Profit	-67.71	-5.03	27.75
OPM	-6.25%	-0.37%	1.69%
Interest	29.87	52.37	37.00
Net Profit	-93.75	-63.55	7.78

(Quarterly, Rs. In Crores)

Particulars	Mar 2016	June 2016	Sep 2016	Dec 2016	Mar 2017
Sales	320.49	357.27	438.63	434.13	414.97
Operating Profit	1.85	5.51	6.43	6.30	9.51
OPM	0.58%	1.54%	1.47%	1.45%	2.29%
Interest	20.96	11.58	8.73	9.25	7.44
Net Profit	-15.08	-3.53	-0.04	1.29	10.06

Above said results are on standalone basis. On consolidate basis sales are higher and company is in loss but loss is reducing trend.

Ten Reasons for Buy FCL:

1.    Company performance is improving on quarterly and yearly basis. Now it is on breakeven point. From here any rise in sales will result increase in profit of the company.

2.    Company is growing @25% - 30%. Now company is planning to sell its products through other retail stores in addition to own stores. This will give a big boost to sales.

3.    Company is launching various new brands in new product segments. A large number of brands and presence in various product segments will help to capture a bigger market share.

4.    Company may also enter in e-retailing through internet and app. It will also help to increase the sales of the company.

5.    Company is reducing debt on year to year. In next 3-4 years, it is planning to be debt free company.

6.    In addition to own manufacturing facility, it is procuring goods from contract manufacturers. It results low liability of investment in plant and machinery and deprecation to the company.

7.    Promoters are having clean record and first mover in organised retail chain.

8.    Company own various properties which actual current market value is more than value shown in Balance Sheet.

9.    Promoters are increasing their shareholding. It shows their faith in the company. In last FY they have increased 4% stake in the company.

10. Investor Porinju Veliyath who is known for inventing multibaggers, is bullish on FCL and his investment company, Equity intelligence India holds 12% share in the FCL.

Disclaimer: This Blog, its owner, creator & contributor is neither a research analyst nor an Investment Adviser and this re-presentation is based on information available on various websites on internet. He is not responsible for any loss arising out of any information, post or opinion appearing on this blog. Investors are advised to do own due diligence and/or consult financial consultant before acting on any such information.

Diwali Pick - STANDARD INDUSTRIES LTD – Big Cash Flow is coming

Standard Industries Ltd is a Mafatlal group company. Company was engages in textile and chemical segment. Manufacturing activity is closed and now, it is in trading activity at small level.

As on 31.03.2016 equity capital of the company is Rs.32.16 crores and Reserves Rs.59.26 crores. It is a debt free company.

Promoters are well known and reliable. Despite company is showing loss due to administrative expenses, it is paying continuous dividend every year from the reserves.

The Company has leasehold land of an area of 92.25 acres at Thane-Belapur Road, Navi Mumbai, (Near Reliance Industries Headquarter) for a term of 100 years computed from 1.8.1965. In 2008, the Company had transferred and assigned to LOMA IT Park Developers Private Limited (LOMA), Singapore, an area of 30 acres for a consideration of Rs.230 crores. From this proceeds, the company has settled all loans and VRS expenses to the employees. Old plant and machinery already sold out.

Trigger point:

Now on 1^st September 2016, the company has entered into a Memorandum of Understanding with Feat Properties Private Limited (K Raheja Group Company) to transfer and assign all its leasehold rights of remaining 62.25 acres of leasehold property for a consideration of Rs.355 crores.

K Raheja group is the country’s second largest developer of Business Park. It is developing 7 million square foot IT Park near the same location named GIGAPLEX. Swiss Bank UBS has taken lease of 4 lacs square feet in this project. Another global company Accenture is already occupying 3 lacs square feet in same IT Park. Due to low rental cost than Bengaluru, Pune and Gurgaon demand from IT companies for lease is growing on this location.

Earlier MIDC has approved for transfer of 30 acre leasehold land, it is expected that for remaining 62.25 acres they will grant permission soon. After approval from MIDC, proceeds of Rs.355 crores will move in Standard Industries books from K Raheja Group Company.

The company may reward shareholders an onetime decent dividend and remaining amount may be used for investments for give good returns like Piralmal group has done. It is also heard that company will buy back shares at a decent price.

After news of sell 30 acres land in 2007 share price of the company had touched Rs.110/-. At present it is available at Rs.27/- only at a dirt cheap price with limited downside risk.

Disclaimer: This Blog, its owner, creator & contributor is neither a research analyst nor an Investment Adviser and this re-presentation is based on information available on various websites on internet. He is not responsible for any loss arising out of any information, post or opinion appearing on this blog. Investors are advised to do own due diligence and/or consult financial consultant before acting on any such information.

Dhanteras Pick- KIRLOSKAR ELECTRIC COMPANY LTD – Turnaround begins

Company Profile:

Kirloskar Electric Company Ltd. (KECL) established in 1946 is one of the leading Indian electrical engineering companies. It produces more than 70 products under eight product groups which cater to core economic sectors such as Power, Sugar, Steel, Cement, Agriculture, Oil & Gas, Refineries, Nuclear energy. It manufactures electric motors, alternators, generators, transformers, switchgear, DG sets etc.

KECL products are known for their high quality, durability and reliability. The company adhere to international standards by acquiring & adapting latest technologies along with in-house R&D.

What went wrong:

In 2008 KECL has amalgamated the business of Kirloskar Power Equipment Limited and Kaytee Switchgear Limited. At the same time they have also make acquisition of a German company LDW. This decision went wrong. There was a sudden rise in loans resulted fall in net profit in coming years and then it turned in loss.

	March 07	March 08	March 09	March 13	March 14	March 15	March 16
Sales	591	821	866	802	680	511	547
Loan	32	131	147	185	210	213	223
Interest	5	19	28	34	42	44	42
Depreciation	1	11	13	17	12	11	11
Net Profit	18	62	30	4	(-) 41	(-) 129	(-) 31

Turnaround Begins:

Company has started cleaning of balance sheet and written off investment in German subsidiary and obsolete items in 2015. Efforts of revival of the company are now yielding. It turned in to GREEN and from last three quarters it is showing a small net profit.

To come out from the problem it has raised funds by selling treasury shares worth of Rs.21 crores and QIP issue of around Rs.40 crores.

In 2014 Lender Banks have restructured the loan and as per restructuring plan company has transferred the non-core real estate to SPV which will dispose the real estate and pay back the bank loans.

The value of non-core real estate assets of the company is more than Rs.1000 crores.

Near Bengaluru airport it is having 100 acres unused land. Company is in process to repay the all bank’s loans by selling non-core real estate and will become a debt free company in coming years.

Competitors of the company are trading around PE ratio of 30. After revival in future decent price appreciation is expected.

Disclaimer: This Blog, its owner, creator & contributor is neither a research analyst nor an Investment Adviser and this re-presentation is based on information available on various websites on internet. He is not responsible for any loss arising out of any information, post or opinion appearing on this blog. Investors are advised to do own due diligence and/or consult financial consultant before acting on any such information.

APM Industries Ltd – Five years chart, up and up only

As per last five years chart of APM Industries Ltd, it shows that on year to year basis APM has moved in upward direction only.

In last five years APM has also paid dividend on ten occasions.

For value investors, who are searching hidden potential multibaggers with strong fundamentals, APM is for them. See the previous five years chart and imagine about coming years.