SANWARIA CONSUMER LTD - IS IT A POTENTIAL MULTIBAGGER - INVESTOR PRESENTATION REVIEW - RESULTS OF Q4 FY 2017-18

SANWARIA CONSUMER LTD

IS IT A POTENTIAL MULTIBAGGER

RESULTS OF Q4 FY 2017-18

SANWARIA CONSUMER LTD  is attracting a lot of attention in recent past with each quarterly result moving the company's sales and profits to higher levels. Q4 FY 17-18 is also good in terms of sales and profits. The results are tabulated below. 

Net sales in Q4 is 24% higher YoY and 11% Higher QoQ. Net Profits are higher   133% YoY and  42% QoQ. Current Market price is around Rs.15.05 and the PE ratio is around 7.84. The volume of transactions on NSE is good at over 24 lakhs. The company had issued Bonus shares in the 2nd quarter of last year in 1:1 ratio. Yet, the price trend indicates a growth in price of 113% over an year. 

On an annual basis, FY 18 sales are at Rs.5055 cr compared to Rs.3512 cr of FY 17. Net profit is at Rs.100 cr in FY 18 compared to Rs.440 cr in FY 17. Equity capital has doubled from Rs.37 cr to Rs.74 Cr. Reserves have grown from Rs.375 cr to Rs.439 Cr. 

On an annualised basis, the EPS is Rs.1.94 compared to 1.66 last year.

So, the question naturally arises - will Sanwaria consumer be a Multi bagger in current and future years also? 

The Price trend last year was on a very LOW base of Rs.7. Currently also, the market price is not significant, being at around Rs.15. The yearly growth in sales is good at 24% and the quarterly growth in sales is even better at 11%. 

It is INVESTOR FRIENDLY, having given out 1:1 Bonus also last year and paying reasonable dividends even on enhanced equity.Company proposed preferential allotment of equity shares of Rs.100 Cr @Rs.35 per share, to reduce DEBT.

SANWARIA CONSUMER	Mar '18	Dec '17	Sep '17	Jun '17	Mar '17	YOY	QOQ
Net Sales	1,407.82	1,273.49	1,221.47	1,152.10	1,132.37	24.33	10.55
Other Oprtg Income	6.34	3.18	2.93	1.94	5.91	7.28	99.37
Total Income	1,414.16	1,276.67	1,224.39	1,154.04	1,138.28	24.24	10.77
Raw Materials	1,297.60	1,184.31	1,223.92	1,108.31	1,103.96	17.54	9.57
Increase in Stocks	37.71	-6.57	-70.14	-17.33	-8.02	-570.2	-673.97
Employees Cost	1.25	1.35	1.67	1.08	1.17	6.84	-7.41
Depreciation	1.82	1.82	1.82	1.82	1.98	-8.08	0
Other Expenses	12.14	44.03	23.96	20.73	11.29	7.53	-72.43
P/B Int., Excpt. Items & Tax	63.64	51.73	43.16	39.44	27.9	128.1	23.02
Interest	20.11	19.57	17.44	17.61	11.38	76.71	2.76
P B T	43.54	32.15	25.72	21.83	16.51	163.72	35.43
Tax	7.84	7.07	4.67	3.21	1.22	542.62	10.89
Net Profit	35.7	25.08	21.05	18.61	15.3	133.33	42.34
Equity-FV rs.1	73.61	73.61	73.61	36.81	36.81	99.97	0
Basic EPS	0.48	0.34	0.29	0.51	0.42	14.29	41.18
Diluted EPS	0.48	0.34	0.14	0.51	0.42	14.29	41.18
MP	15.05
PE	7.84
VOLUME	2425816	on NSE
PRICE TREND
19.05.18	1 week	2 week	1 month	3 month	6 month	9 month	1 year
Price	16.35	18.1	20.65	21.2	21.65	7.41	7.05
Gain / Loss	-7.95%	-16.85%	-27.12%	-29.01%	-30.48%	103.10%	113.48%
52 WK-HI	34.4
52 WK-LOW	6
MKT CAP	1108 CR

Sanwaria consumer was earlier known as Sanwaria agro Oils Ltd and the name was changed due to the changing product profile of the company. 

The company's Promoters are 1.Shri Anil Agarwal, 2. Shri Gulab Chand Agarwal, 3. Shri Ashok Agarwal 4. Shri Satish Agarwal .

We need to carefully examine the Latest Investor Presentation of the company - to see what the future has in store for the company. 

The company's plants are at 1.SEP – Itarsi (500 TPD) 2.SEP – Mandideep (1500 TPD), 3.SEP- Betul (500 TPD), 4.Rice Plant- Mandideep (200 TPD) 5.Rice Plant- Itarsi (400 TPD), 6. Soya Flour-Mandideep (10 TPD), 7.Soya Chunks- Mandideep (10 TPD)

Company’s premium products basket consist of:

➢ Basmati Rice (Exotic & Premium- Raw/Sella)
➢ Refined Soyabean Oil, Refined Rice Bran Oil/ Fortified with vitamins
➢ Chakki fresh Atta fortified with Soya Flour
➢ Chakki fresh fortified Protein & Iron rich Atta
➢ Maida, Suji, Rawa, Besan, Daliya, Pulses (Dals),
➢ Soya Flour, Soya Chunks (Bari)
➢ Salt, Sugar, Poha
➢ Soya Meal, Soya Meal High Protein
➢ Rice Flour, Lecithin
➢ Aqua Feed
➢ Poultry Feed

 10 New Products are recently Launched (Now total 35 products):

• Cattle Feed
• Poultry Feed
• Mustered Oil
• Sunflower Oil
• Khandsari (Brown) Sugar
• Sumin seeds Powder (Jeera)
• Turmeric Powder (Haldi)
• Coriander seeds Powder (Dhania)
• Red chilli Powder (Lal Mirch)
• Tea

The company is now present across the entire value chain of procurement, processing, product making, distribution and marketing . It wants to market its Brands internationally.

Presence in a large and fast growing segment :

The Company is amongst the top food producers of soya/Paddy/Wheat products in India.

q The Group has sustained exposure in trading of food grains and pulses apart from soyabean products, wheat products, rice , oils and other food products.

Location Advantage :

The company’s operations in the heartland of the soya & Paddy & wheat belt of India gives it a major locational advantage reducing the logistics costs substantially.

The plants are located in MP which is a power surplus state and hence the Company has access to cheap and uninterrupted power supply.

The Promoters are in the business for over 45 years, enabling it to establish a very strong and efficient procurement system .

Strong relationship with farmers with 80 direct procurement centers across MP. Farmers bring their crop and company purchases directly from farmers.Company also procures goods from international markets to meet its requirements of soya oil. 

it has ventured into modern trade by tying up with various retail chains/malls like, Aaporti Super Market, Reliance Mart, Pantaloon, Big Bazar, ITC Choupals,Wall Mart etc. Company has already established separate channel to export  its branded rice to Middle East and Africa. The Company is venturing into different geographical locations through Franchise Route.

➢It is starting business in Singapore through 100 % Subsidiary which will get business from rest of the world along with cheaper finance facilities.

➢Net Sales and PAT are expected to grow at a CAGR of 13% and 35% Over 2015 to 2018E, respectively.

➢EBIDTA Margins are expected to increase due to improvement in manufacturing efficiency, increase in sale and change in product mix. 

The company affirms that it will "continue growth in top line and bottom line". Growth in Turnover in FY 17-18 was 43.91%. 

The revenue Mix in FY 14-15 indicates that SOYA MEAL was the dominant item in sales with 74% of turnover. But, in FY 17-18, SOYA MEAL is down to 20.31%, and BASMATI RICE is up to 52.69%. Food grains and others is at 21.86% of turnover. 

Thus, the profile of the company is changing drastically in recent years. Its products continue to change. It is no more dependent much on SOYA for its growth. Now, it is a true FMCG company with BASMATI RICE as the main contributor.

• Company has entered into an agreement with “Patanjali Ayurved Limited” to manufacture and supply Soya Chunks or Soya Bari inthe “Patanjali Brand”.
•  
• So, company feels that - Looking to the recent tie-up of Patanjali with online platforms or virtual marketing networks like Flipkart, Amazon, Bigbasket, Grofers etc. SCL Products will also be available on all these platforms as a manufacturer.

BRAND BUILDING 

• Company has already opened 25 stores / retail outlets in MP under the brand name “Sanwaria Consumer Shoppy”. 25 more stores are in pipeline.

• Company will open 100 stores in MP and Maharashtra. Thereafter, planning to cover other parts of India with 500 stores. 

AWARDS 

• Recently company is ranked 313th in amongst top 500 companies on the basis of turnover by “Fortune India 500”.
•  
• The Company is ranked 283 in Financial Year 2016-17 amongst 1000 India's finest Companies on the basis of Net Revenue by the “The Financial Express – FE1000”.

“Sanwaria Consumer Ltd” is primarily engaged in food processing which includes:

- Soybean Processing- for extraction of Soya Oil, Soya Meal (De-oiled Cake), Soya Flour, and Soya Chunks (Soya Bari)
- Paddy Processing- for Basmati and Non Basmati Rice
-Rice Bran Oil Processing

- Wheat Processing-for Flour, Maida, Rawa, Suji, Dalia, Chakki Fresh Atta- Gram Processing- for Besan 

 ➢ It has a strong distribution network with reputable brands like Sanwaria, Narmada, Sulabh and Nashira.

➢ It has strong backward integration for its raw material having innovative model of Direct Procurement Centers (DPC) across the state.

➢ Amazing forward network of C&F agents, Distributors, Retail chains, Malls for sale and marketing of its products.

➢ Sanwaria has adopted strategy to convert its conventional commodity and agro based business into an FMCG Business by adding new product range like Suji, Maida, Dalia, Besan, Chakki Fresh Atta, Poha, Soya Flour, Sugar Pulses and packaged food, etc.

➢ Presently have 35 no. of products which will be gradually taken to 50 and the finally to 100 no. of products basket with in next 2-3 years.

➢ It has commissioned and started the production of Basmati Rice with a capacity of 200 TPD in Mandideep in 2013 and 300 TPD in Kiratpur Itarsi in 2015.

➢ It has planned to open 100 ATM size stores starting with MP and then rest of India to sell our products directly to consumers. 

➢ Food and food products constitute around 35% of the wallet spend. Out of this more than 50% comprise of staples like wheat, rice and edible oil.

➢ Current per capita food expenditure in India is 1/6th of China and 1/16th of US.So,it is likely to go up in coming years.

➢ Spending on processed food is likely to surge 4x by 2020 as the segment has grown at a CAGR of 18% in the past five years. Soya products especially are gaining increased acceptance due to health consciousness.

Note : This analysis does not constitute a recommendation for the BUY / SELL / HOLD decisions of Investors, for which they need to make their own further analysis.