Hi @arpitjain305,
I inferred it no. 2 post going through IPO analysis on https://www.google.co.in/amp/s/www.sptulsian.com/free-zone/ipo-analysis/advanced-enzyme-technologies.
'Advanced Enzyme Technologies is the largest enzyme company in India, with fermentation capacity of 360 cubic meters and has the second highest market share domestically, next only to the world’s largest enzyme company Novozymes.'
Pl correct me if I am wrong
Hi @nityanandparab and @arpitjain305,
I correct myself…AEL is no. 2 in domestic consumption after Novozymes. They are amongst top 15 globally.
Thanks for asking this which prompted me to verify.
Disc: Invested, bought from market on day of IPO open.
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Thanks @Santosh_D. Just wanted to understand your take on the growth story of advanced enzymes? And is the management/leadership excellent?
Just by having a moat it does not mean the company will be able to be quote at high PE.
Why the stock was quoting at high PE after the IPO
- As the enzymes market is new and not many companies are available in the local market to compare with AET. So the technology was new. People were assuming that the company is in growth phase and we should grab a pie of this opportunity. So people started buying the stock and it gave good returns in the short term
-Then came the Dec 16 results which were below expectations as per the investors. But management said its performance should not be seen on quarter to quarter basis and there was one client who has already fulfilled his capacity for this year and its demand has been reduced for that quarter - Investors were expecting Mar 17 Quarter to be good quarter. The sales picked up but Net profit got a hit. the Yearly profit is coming to Rs. 90Cr which gives a PE of around 50 for a Market Cap of 4500
-If you see last years profit it was Rs. 78 Cr. That means this year the profit has only grew 15%.
-If this is the trend to continue then you are having a company showing a growth of 15-20% and PE of 51. This scenario is not sustainable
-In the last concall, the management had said they have developed new methods for Palm Oil Extraction and there are opportunities in the same, but it should result in Topline and Bottomline - Management has said they are looking for 25% YoY growth. But again it will be limited opportunity for new investors to get handsome profits
Here as an investor we will need to watch below things
- How the company proceeds on Palm Oil Extraction technique which they have developed
- Their dependence of products on handful of clients(As in the concall the management said one of the client and product is having a 30% weight-age and that client has fulfilled his requirement of entire year in first half only and due to that 3rd quarter results were tepid.
- Addition of new clients
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@nityanandparab
Thanks, agree with the presented views
Unable to find 90 Cr as profit while looking at Moneycontrol… It’s much less… Consolidated net profit is also less than 90 if I sum up for all qtrs. Could you please help to understand it correctly.
Haven’t really followed this company, but it popped up as one of the few where Promoter seems to have been buying on the market:
http://alpha-analyst.com/search?fq%3Atypename_s%3Abse_insider_trades=on&fq%3Aentityid_s%3AINE837H01012=on&q=&fq%3Atransaction_mode_s%3AMarket=on&fq%3Atransaction_type_s%3AAcquisition=on&fq%3Areported_dt%3A%5B2017-04-01T00%3A00%3A00Z+TO+NOW%5D=on&fq%3Achange_value_f%3A%5B1.0E7+TO+%5D=on
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Promoter holding has increased from 70.1 to 71.31 % during the quarter, in previous quarter also there was an increase in promoters holding.But it’s interesting to see the increase in no of pledged share percentage from 25.3% to 26.27% at the end of june 2017 quarter…!
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Probably promoters are pledging existing stake to arrange for funds to buy more from open market. They see secure future of company and expect share prices to go up further.
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why this stock is under performing . This Stock has limited competition .whats your view on this stock
Whats the funda behind pledging shares and using the same money to buy shares in open market ?
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Three warning signs with this co while i’ve been tracking it:
- Management guiding 30% growth forevever (next decade to be precise).
- Management using words in concal like “Don’t worry, we’ll recover in Q4” …when Q3 results were a disaster)…who goes to the extent of reassuring analysts to such extent!
- When Q4 turns out to be same as Q3, resort to borrowing money by pledging shares to raise stake.
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Disappointing results Q1-Fy18
Revenue dropped to 80 cr from 95 cr YoY ( from 86 cr QoQ)
Expenses increased from 51 cr to 57 cr YoY
If it can not grow 30% CAGR…stock is set to a derating…
please comment hold or sell
Same here. I am thinking to wait for next quarter, provided they come out with result soon.
Any one attended the concall??
Pls share updates
Buying decision should be solely based on growth projections and the
implied valuations. Should not be based on whether majority like it or not
like it, IMHO.
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Investor presentation for Q1 results
The management in conference call has explained the reason for decline in revenue was due to top most client not purchasing adequate in Q1. But they expect even the top account is expected to grow 10-15% this year. They guided for the annual revenue for FY18 at 380 - 400 Crores.
Disclaimer - Invested at 5% of my portfolio
Anyways, I have said what I have wanted to earlier. Company is good. But, I would definitely not trust what management is saying. And would only venture into it, when I see lot of margin of safety. Which I don’t see now.
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Agree completely. Definitely a good company. Commanding 38 PE for a 15-20% compounder. A moat with less MOS. If the acquisitions and mergers click then the rate of growth may be higher.