KRBL- The King of Basmati rice


(sainkar) #542

It’s interesting to see that only one Mutual Fund (Reliance Growth Fund(G)) is holding the stock.

  • During May it has purchased 7,87,720 shares
  • During Jun it has increased to 13,45,079
  • % of AUM is 0.69

(rupaniamit) #543

anyone aware of earnings conf call information to discuss Q1FY19 results which will be announced tomorrow?


(srikanthg) #544

Tv interview schedule:grinning:

Conf call


(manivannan.g) #545

image

  • Domestic revenue from agri business has increased 11%, whereas the export (rest of world) has slumped to 40%

More details:


(cool_gaurav) #546

Company is not able to increase revenues for last 3-4 years (Flat/negative growth) and this quarter there is a decline in revenues by 15% & profit declined by 12 percent. Stock is trading at around 19 TTM PE with no growth in sales. Not a good performance…


(GSrikan) #547

Resignation of Whole Time Director Mr. Ashok Chand. Reason given: Personal reasons

Change of Auditor: To Walker Chandiok co & LLP

Brief google suggests nothing great about The Auditing firm.
Seems they are auditing Delta corp, NRB bearings, ICICI (recently appointed), Eros, RIL, Amber Enterprises, Capital First etc

As far as the results are concerned, I expected domestic sales to go down due to restaurant’s being exempt from Input tax credit, 5% GST on basmati making it less competitive w.r.to unorganized would bring down domestic sales. Surprisingly, domestic sales grew & Exports were hit.

My wild guess is, it could be due to Iran’s imports being hit due to US sanctions?

Discl: Invested


(manivannan.g) #548

First KRBL’s auditors renamed themselves, people raised concerns w.r.t to the auditor credibility, for a “possible” manipulation and then now the auditors has been changed. Isn’t something fishy in this ?

They do audit PC Jewellers as well.


(Mikesingh) #549

See at the first, even we say KRBL is better placed among the Basmati rice selling companies, yet the valuations are very steep. Even after correction it is quoting higher of its average historical P/E. P/E growth generally is on account of growth in earnings( topline) and margins sustainable over a longer time. As margins have a limited scope of growth hence the revenue growth is better metric.
KRBL loading up so much on inventory and as someone mentioned it played on gross margin to show better profits
Even if one see the results of this quarter there is clear mark down of inventory and hence a higher COGS and lesser margin.
Such things cannot sustain much.
Moreover with recent controversy surrounding it, it realy hurts the sentiment.

Disc: Not invested and find valuations steep. But a potential long term business.


(ajay81) #550

Walker chandiok is among the top 5-6 auditors in the country. Grant Thornton is the auditor. In terms of credibility 100 times better than previous one


(rupaniamit) #551

image

This quarter margins seem to be improving. Exports numbers have been very volatile impacting topline. Looking forward to understand from management reasons for decline in top-line.

Management mentioned on last con-call that they have cut-down on non-branded business and will be focusing only on branded business (which means lower volume but higher realization/value) which should keep EBITDA margins at around 22-23% range. They also mentioned that stock level of aged inventory is low in the industry and KRBL has got maximum aged inventory which should help to keep it’s margins firm. They also mentioned that low cost inventory benefit should continue in FY2019. Post FY19, key item to monitor would be growth in volume and level of realization/margins that management can get.

Disc: invested


(prantheone) #552

(GSrikan) #553

https://www.cnbctv18.com/videos/retail/krbl-gets-clearance-to-export-rice-to-china-says-joint-md-gupta-370951.htm/amp

The reason for fall in exports is mentioned. 200 cr worth goods were stuck at ports and transported in July. Will be interesting Sept quarter results, if 200 cr gets added to regular Sept quarter revenues.

The old inventory is still contributing to profitability. Next year will be the year with higher cost inventory and most likely soft Paddy and soft basmati price.

Disc: invested


#554

Heard this from some friends who are in rice (non-basmati) business in south:
Some dealers ask to pack rice in India-gate packs(non-basmati) which are available outside. The packs may be not look as geniune as original.
A few days back officials had raided, seized & served notices to these guys who are using India Gate trademark to pack their rice un officially. I am not sure whether the raid was conducted only for India Gate brand or also for all other unauthorised use of trademarks. Even the pack vendors who are supplying these bags were raided. But all these is related to non-basmati rice.


(rskothari) #555

A case on Anti-Profiteering (GST) with positive outcome for KRBL

Kumar Gandharv Vs. KRBL Ltd. [(2018)

Facts: The Applicant in this case filed an application that the benefit of reduction in rate of tax on ‘India Gate Basmati Rice’ had not been passed on to the consumers as its maximum retail price had been increased since implementation of GST w.e.f. 01.07.2017 and hence margin of profit had also been increased by respondent. Held: India Gate Basmati Rice sold by respondent was not liable for tax before implementation of GST and after coming into force of CGST Act, 2017, it was levied @5% w.e.f 22.09.2017 with eligibility to avail ITC. It is apparent from the returns filed for the months of September to November 2017 that the ITC available to the respondent as a percentage of the total value of taxable supplies was between 2.69% to 3% whereas GST on the outward supply of Basmati Rice was 5% which was not sufficient to discharge the tax liability. Moreover, in this case rate of tax has been increased from 0% to 5%. Furthermore, there was an increase in the purchase price of paddy in the year 2017 as compared to its price during year 2016 which constitutes the major part of the cost of the product. Therefore, there appears to be no reason for treating the price fixed by respondent as violation of the provisions of the anti-profiteering clause.


(Growth_without Debt) #556

Look at devaluation of currency where they are exporting…E.q. Iran

In comodity linked business paying high P/E is dangerous…it is 50% down from peak now It need to go 100% up to reach earlier price!!


(phreak) #557

There is a big slump in volume probably due to devaluation of Iranian rial. Here is the export data of Basmati rice to Iran.

This data in USD terms where you can see exports YoY to Iran is down from $523m to $459m. This is because of volume drop from 514230 MT to 425372 MT. The volume drop is higher than drop in value - Thankfully the firm export prices at $11/kg (Rs.73/kg) has helped the numbers a bit. These are overall export numbers for Iran and sort of reflect KRBL’s trend.

If you see overall numbers for all countries, the growth is flat for the first time in 6 quarters.

In INR terms though, there is a 5% growth, thanks to rupee depreciation in Q1, FY18.


(Growth_without Debt) #558

Thanks for data. Data is upto Q1…is it March or June?
Please note that in March Qtr Iranians currency was comparatively strong but presently it is too much down


(phreak) #559

It is complete Q1 data. Here is the monthly split-up for Iran.


(nilwadmalwar) #560

KRBL

5 Years: 14.06%
3 Years: 2.66%
TTM: -5.43%

LT Food

5 Years: 18.24%
3 Years: 9.93%
TTM: 11.62%

Just want to compare both. Sales of LT foods are growing. And also available at less PE @ 12. Both stock has corrected more that 50%.

Considering the so much smoke in KRBL, Does any one think LT is more attractive? Is there any benifit to LT due to these allegations?
Can someone shed more light as i am newbee…after going through whole thread LT sound a good investment as both stocks have corrected…and LT seems less risky?


(timedimpulse) #561

You should compare debt levels also. LT Foods is swimming in debt