Basant Agro tech- Will it be Multi bagger

Stock Opportunities Not-so-Hidden Gems
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Hello Investors,

I am very grateful to the knowledge I have been acquired from this group… feel regretting joining very late :slight_smile:

This is my first stock discussion…please forgive me for any mistakes!!

Yes, the stock I am discussing about the Basant Agro tech, which is part of Bhartia Group. As per their website (http://www.krishisanjivani.com/aboutus.aspx ) its in operations for last 100 years, and went into public in 1990.

From Comonay Website:
Basant Agro Tech (I) Ltd: , Has a multi-product portfolio which includes various grades of fertilizer, seeds and agriculture inputs. Not only have we set up manufacturing and processing plants in Kaulkhed and Kanheri (Akola), but also boast of a Research and development center at Kaulkhed recognized by Govt. of India.

They have the production facilities in Karnataka, MP and Maharstra
Following are some relevant ratios.

Market Cap- 63.69 Cr
Sales FY 2016- 316 Cr
Market cap to Sales: 0.20
Price to book value- 0.62
Consistent Dividend paying Company for last 10 year or so.
PE- 12.32
Debt/Equity: 1.24

Following are the items attracting me to invest in this stock.

  1. Sales to Markt cap: 0.20… If I compare Basant with any of peers its undervalued by 70 to 80%. For example: Same matrix for Rallies: 3.51(FY 16- Sales: 1385 cr and M-cap: 4863- (little change ( 2 to 3%)be there as I have prepared this 1 month back), Monsanto: 6.87 times, Kaveri seeds: 4.97, Advant: 4.96, GSFC: 0.8, GNFC: 0.77, Tata Chemicals: 0.94 and Deepak Ferilizers: 0.58
  2. Though its Micro cap( 63.69 cr), its dividend paying company for last 10 years.
  3. FY 16- Operating cash flows: 32 cr for market cap of 63 cr
  4. No Equity Dilutions from inception ( correct me if I am wrong)
  5. No single share of promoters pledged

I read through annual reports for last 4 years, haven’t found any red flags( at least I was not able to find -senior should help-- there might be few which I couldn’t identify)

Concerns:
ROE- 5.75, sales growth 2.8% for last 3 years.
Stock not really moved any where for last 3 years.

I feel if Monson is good this time, this stock should catch up the numbers, even if it do M-Cap to sales at least 1, it should be 5x from current levels.

In this context it should be worth noting that Monsoon was below average for last 3 years, hence all Seed and Fertilizers companies are really not doing well. But we really look for triggers like: 1) Gov wanted to double farmers Income by 2020 (2) Gov Fertilizers Subsidiary reduction/deregulation or Direct benefit transfer 3) More Focus to increase the rural income, this should bode well for this company.

If the seniors or other members can share their views, I will be most great full

Disclosure : Holding small 5% of my portfolio, planning increase stake based on the conviction I get.

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credit rating by ICRA in 2016. An article on fertiliser stocks. Fertiliser stocks and 2017

I think the debt is quite a bit on the balance sheet and that should be added to market cap to get the correct EV. Last two quarters the company is barely profitable (seasonality impact probably) and profit margin is shrinking. The topline is flat for several years. ROE is very low and hence market will value it accordingly. What are the triggers apart from the bullish market?

Thanks
butun

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Hi,

Do we have a quarterly concall transcript ? Could you share the link here ?

Cheers,
Amit

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EV is 184.95 Cr and EV to EVEBIT 10.25. Iam not sure how to read this matrix and it’s implications on the stick price.

I do agree revenue growth is flat for 3 years, it’s only because monsoon was really bad…The states where it has production facility s are starting at 3 succesiv drought situations…

For debt side: They have 122 Cr per fy 16 financial, which all are term loans from banks could be repayable by 2020 on reducing balance method… Hence u can find debt is reducing on continuous basis …My guess it should be 100 Cr this year…Close debt to equity ratio 1.

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I don’t have con call transcript… if any board members have Plz share it…

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In FY 2007 it had sales of 92 cr and Net profit of 4 cr and in FY 2016 sales at 317 cr and Profit at 6 cr. absolutely they where not able to make profits with increase in sale! And debt has increased from 23 cr to 123 cr now . Dividends has been paid with debt so nothing positive on it . In last 10 years it has destroyed share holder value. There should be something positive to bet on these kinds of stocks.
My point is if you want to get rich you have to have a strong conviction. So that you buy for good amount so that if the stock goes up 10X you become wealthy. Lets say in this case are you willing to invest 10-20 lakhs? answer is a NO , retail will invest say 10-50k max normally to test if it works, and lets say if it works also its not going to change your life style. So better build strong convction before investing and once build invest a sizeable amount so that it makes a difference.

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Totally agree with you, Vivek. Retail investors lack conviction. Usually they invest on borrowed conviction or subscribed conviction. Much of the high conviction reports not available to retailers. Not an an expert to AR, BS etc.

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I existed all my positions… It do make sence what you says… I was in the wrong fancy to make quick buck… by betting on these kind of companies… like 100 old company, low market cap to sales…Low PE… Like Howard Mark’s…These are cheap for a reasons and there will be cheap…Thanks for important lesson

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Any one traking this company.

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Heard there is a huge expansion coming up any one has any idea

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A wide news and msg coming stating that the company is stopped from trading any one has any idea pl help or tell if it’s true

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I am not sure if anyone is actively tracking Basant Agro anymore on this thread as the thread was last updated in 2017. The stock has done well in the last 1-2 years and I feel that the fundamentals of the company look good today. Also the company looks like all set to post highest ever net profit and highest ever net revenues in the next few months. I have created a video on Basant Agro based on my research about a month back - Basant Agro Share Analysis Video. The stock has done well from those levels and looks like stabilising now. I am invested in the stock.