Recently only, Rain industry came forward and said -
We are only 5% in Graphite Industry and any change in price of Graphite won’t have much impact on us.
They given subject as Query to Investor.
PDF Link on BSE
Seeing Porinju entry to BCL Industries, I added more today on Sanwaria and also took some Poona Dal and Oil. Sanwaria said that edible oil import is good for them.
Disclosure: Re-entered in Sanwaria Consumer.
Dear @satya61229, That’s a very pertinent observation. However, I feel Rain’s management is very professional and does not come with regular updates of this nature. The update you mentioned was to clarify Company’s position following the comments of an analyst who didn’t research properly before taking a negative call on TV. For Sanwaria, they could have avoided the last update in my opinion.
Disc: Invested in both Sanwaria & Rain
Dear @Nolan, you are right that Sanwaria’s comment is not that required. But these days in bull market, I see promoters are doing some operators kind of job and stock is rewarded as upward price movement too. We need to see if they are doing height of it or just showing little interest on stock price.
Disc: Invested in Sanwaria and Poona Dal. But not on Rain Ind
After a longtime, I feel only today there was a normal trade happened in this counter. Fed up with UC/LCs.
In response to my query related to low OPM and its guidance for next 1-2 quarters, Company responded saying:
“You are talking of OPM whereas SCL targeting at KRBL’s double digit PAT in coming 2-3 years”
I replied by asking, “So that means with a guidance of 10,000 cr. topline in 3-5 years, we can expect a bottomline of around 1000 cr. in the same time frame?”
They gave a general response saying, “SCL is trying very hard on every front , so success is bound to come”.
From a PAT of 44 crs. in 2017 company expects to clock 1000 crs. by 2020-2022. That would be a tall order. Makes me more keen on keeping close view on quarterly results and on following this story like a night driver where I am able to see just as much as my headlamps allow me to.
What is KRBL Please?
Company owning the popular ‘India Gate’ basmati rice brand.
http://www.bseindia.com/stock-share-price/krbl-ltd/krbl/530813/
Current Consolidated NPM of Sanwaria is about 1.7%. Is it likely to go up
to high single digit by 2020?
Keep an eye on balance sheet and cash flows as well.
I am getting a feeling that this is not going to end well for retail investors.
Hi Nolan,
You may find this thread interesting.
Sanwaria’s Trade receivables are at Rs.1243 Crores and as a percentage of TTM Sales (Rs.4657 Crores), it stands at 27%. For comparison, Rs.261 Crores is KRBL’s receivables on a sales of Rs.3299 Crores which works out to just 8%. For LT Foods, its around 14%. This is quite a big difference for companies that are essentially in the same business. It looks to me like Patanjali is running blind with Sanwaria’s money.
With such a large part of assets locked up in receivables (Market cap of company is 1500 Crores and receivables is Rs.1243 Crores!), and a not-so-great interest coverage - Rs.69 Crores interest paid on an EBIT of Rs.154 Crores and margins around 3.5%, This company has to shovel in a lot more money to grow the topline and for that they need to borrow/dilute a lot more which is not good news going by their current interest coverage ratio (2.2).
This is quite interesting. Their current PAT margin is 1.4%. KRBL’s PAT margin is at 14%. The gulf is just a bit too wide to bridge. My gut feel is that this borrowed money fuelled growth is quite unsustainable because if they borrow more, they are building a house of cards that can be toppled by the gentlest breeze.
This is gold. Thanks for sharing! Have been thinking on similar lines last few weeks.
Indeed interesting. What is real however, are the products and their association with Patanjali. Their pledge is reducing and with 70 odd percent holdings, promoters have high skin caught in the game. In a bull market, all kinds of stocks move.There is no way however to separate the horses from the donkeys. Unless they are fully prepared to commit a fraud, the numbers seem attractive. Having said that, in my previous posts too, I have always recommended tracking this Company closely with cautious optimism.
Any good reason why you would compare TTM numbers when the revenues clocked multiple times growth from Dec-16? Be reasonable to take comparable numbers. Also, I have already explained in the previous post that these were mostly recent receivables.
Best part I liked about this company is that they published audited results on 3rd oct!! That was first day of 3rd quarter, 1st and 2nd being holidays.
Companies take longer to submit monthly stock statement to bankers (min 20 days) (being a corporate banker, I can vouch). But Sanwaria took the stock of such widely distributed inventory, got it audited in 2 days (non-working) and managed to publish results in 1 day. Also, auditors must have asked for bank statement of quarter end. No bank will provide that over a weekend, and turnaround time for private banks is at least 24 hrs for that. PSU banks should take even longer than that.
When something is too good to be true, it probably is.
Instead of using FY17 numbers - FY17 Sales against Receivables in FY17 balance sheet (Which btw gives 727/3512 = 21%), I have used the most recent one provided by the company with the half-yearly results.
The trade receivables are from the balance sheet on the last page here.
http://www.bseindia.com/xml-data/corpfiling/AttachHis/1036c256-bf78-46e5-ac30-34d46a3639e9.pdf
To compare the most recent receivables as of 30/09/2017, its only fair to consider the TTM sales (01/10/2016 to 30/09/2017) isn’t it? This works out to 4657.39 as per screener.
https://www.screener.in/company/SANWARIA/
So receivables as percentage of sales is increasing quite drastically from what I can see 21% to 27% in a span of 6 months. Where is the working capital going to come from for expanding the topline as they are planning? I see that their short-term borrowings have increased by 37 Crores between March and September. I don’t think this company is managing its capital well.
I hear similar things about companies taking too long publish results. Company has had a sluggish reporting compliance in the past. Maybe they are just trying to change their past behavior. These are inconclusive arguments. Also, request you to kindly make necessary disclosures.
Fair point. Being a turnaround candidate, expecting everything in perfect order would be a high expectation. I would give them some more time. But your observation is well taken and should be tracked closely to identify mismanagement of working capital.
I see Trade Receivable to % of sales for Sanwaria is coming at 15% and for KRBL, it is 7%.
Is this 15.61% a big number on standalone basis? I am asking for standalone as this company is improving fast so we can wait a little for improvement.
By the way, I have created “Receivable to percentage of sales” in Screener. I have added description too with the ratio. If you see the method wrong then please tell me. I would correct, if I can understand your point.
Disc: I took re-entry at around Rs 21.
Sanwaria’s Q3 results will be published on 3-Jan-2018. Looks like the management making this as a standard itself.
Expecting a good set of numbers once again.
Recently there was an update of RTA transfer from Karvy to in house team as the changes came at a crucial time when results are about to come and I couldn’t remember any other company with in house RTA how can we understand impact of the same if any and as on screener it was mentioned Interest expenses supposed to be capitalised how is it visible (Is this derived from warrant capital which was used to repay debt etc or anything)
Inputs on their upcoming Cattle Feed product are welcome looking the growth of KSE in recent times (however promoter share holding decline a cause of concern). Could Cattle Feed be another Staple Rice for Sanwaria
