Recommendation From Auto Tyres & Rubber Products Sectors
This section gives a recommendation of a stock having stockmargin padding price below Rs 100 with sound fundamentals and expected to give handsome returns over a one-year time horizon
Kriti Nutrients
COOKING UP A PROFITABLE RECIPE!
HERE IS WHY Revival in financials Positive sector outlook Pick-up in order book
Kriti Nutrients is in the business of soya seed extraction and manufacturing and selling of cooking oil under its own brand Kriti. The company's primary products include soya lecithin flakes and flour and soya refined oil. Its soya plant is located at Dewas, with an area of approximately 60,520 square metres. The company is also engaged in trading of sunflower oil.
Indian soyabean is a non-genetically modified organism (non-GMO) crop and has an advantage over the other origins. Hence, the demand for nonGMO protein rich soya is continuously growing and Kriti looks well-poised to take advantage of the opportunity.
The company has created a niche market segment for itself through its quality soya products and strong distribution network. It is also expanding sales network for Kriti soya refined oil, which caters to the premium segment of the market.
Also, to improve the overall business margin, the company plans to identify high margin value-added products for food, pharmaceutical and nutrition industry and align them with its overall product offering. For this, it plans to invest in modernising the refinery complex which will help it to achieve greater operational efficiencies and capabilities to produce varied products.
Kriti is also focusing to increase its penetration in export markets as its products meet global norms and are used in food and pharmaceutical applications. The advent of GST has helped the company to expand its geographical reach by developing strong distribution network outside the existing markets.
On the financial front, the net sales of the company decreased 28.8 per cent to Rs 129.86 crore in the fourth quarter of FY18, as against Rs 182.54 crore in the same quarter of the previous year. The company’s PBDT increased 96.44 per cent to Rs 6.07 crore in the fourth quarter of FY18 on a yearly basis. The company’s net profit also increased handsomely by 109.09 per cent to Rs 2.96 crore in Q4FY18, as against a net profit of Rs 1.43 crore in the fourth quarter of the previous year.
On an annual basis, the company’s net sales increased 0.98 per cent to Rs 461.04 crore in FY18 on a year-on-year basis. The company’s PBDT increased 130.53 per cent to Rs 27.78 crore in FY18, as against Rs 12.05 crore in the previous fiscal. The net profit of the company rose 150.23 per cent to Rs 15.79 crore in FY18, as against Rs 6.31 crore in the previous fiscal.
On the valuation front, Kriti Nutrients has a PE ratio of 10.60x as against its peer Jayant Agro Organics (14.39x) and Agro Tech Foods (52.41x). The company’s return-on-equity (RoE) and return-oncapital-employed (RoCE) stood at 17.76 per cent and 19.28 per cent, respectively. The company has a debt-to-equity ratio of 0.90x and price-to-book (P/B) ratio of 3.32x. The company has been able to grow its profits at CAGR of 21 over the last three years. Since the margins in June quarter might shrink due to high soya prices, we recommend our readerinvestors to BUY the stock in a staggered manner.
