JC of Mr. Anoop Gupta has been extended till 27th March against request of 14 days from Ed. KRBL_CASE_AW_22_MAR.pdf (103.4 KB)
So far no other information came out apart from so many extensions which is not bad.
I like to hear from others on your views about current valuation of KRBL without considering ongoing case. Does it look attractive or just better at 8 PE?
Business valuations and ur ultimate return frm them is a combination of several dynamic variables and Management\Promoter quality is one of them.
At this point of time, as u asked, keeping the mgmt factor aside - the valuation from business strength perspective is a great buy. However, ur returns frm the investment will be decided not by the valuation that you’ll buy into but frm the one whn u sell it and the business value crated in the interim holding period. The risks in this case are : -
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Even if the business does well frm here on, the multiple doesn’t re-rate due to mgmt issues overhang. Now, a takeover or mgmt change cannot be done in this case as the promoters hold a majority stake, so the narrative that the mgmt drives is largely going to decide this factor
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Other competitors nimbly strengthen thr business using this opportunity. And if u hv studied LT Foods, I blv they’ve done a reasonably good job over this period of last 6-12 months. So, it might happen that despite its strength as a great business, KRBL will have a similar sized better established competitor with no mgmt issues of this type and hence it wont get re-rated to premium valuation.
Disclosure : - Invested in KRBL. No holdings in LT Foods.
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Why you want to stuck in KRBL with clear cut promoter integrity issue?
At same valuation u can buy L T foods
= which is expanding with new geography and new products
=with stable operating margin(even in commodity buisness)
=Declining D/E ratio since 5 years
=Promoter buying from open market in last 1 year
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Absolutely. I booked a 20% loss and switched from KRBL to LT Foods as soon as the corporate governance issue came up.
Doesn’t Chamanlal Setia look like a better option? It has better return ratios and is available at a lower valuation compared to LT Foods. Promoter is vastly experienced and has been the President of rice exporters association for several years.
@Pragnesh I am already holding KRBL @237 and now thinking to buy small quantity as CMP is 20% down from my price.
If your question is more on comparison with LTF, I like KRBL balance sheet better than LT and also I believe KRBL brands are more popular than LTF in both domestic and global basmati rice market.
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To add to this the operating margins of KRBL are almost double (20% c.) as compared to LT foods operating margins (10% c.)
Such vast difference in margins reflect inherent strength of brand, purchasing efficiency and pricing power…
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It goes like Sindhubaadh, Judicial custody extended till 30th March.
JC of Mr. Anoop Gupta has been extended till 30th March and they have also filed for bail. PFA copy of order. KRBL_CASE_AW_27_MAR.pdf (34.5 KB)
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KRBL has market in only middle east and Iraq and Iran and India. They have very less presence in Europe and US markets. As we know as per NEILSEN report LT food got market share of 28% in urban India during covid peak time and 29% to 30% in rural.
They have 40% market share in US as a brand royal and 26% in Europe. Middle East market is equipped with huge competition and so many number of small players are existing. Yes I do agree they have good brand, but other than that where are they?.
If you look at LT food they are diversifying their revenue stream with organic business. Their research and development will yield results in long term not instantly. Recent acquisition in Netherlands is a chance to explore their products and as Netherland company have a market share of more than 20% there.
Key notes, management is walk on talk. As committed they are strengthening the balance sheet and removed the pledge and exploring the middle east market. It’s a patience story for next two to three years.
Disclosure : my opinion and just for information.
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http://agriexchange.apeda.gov.in/indexp/product_description_32head.aspx?gcode=0601
Please have a look at volumes in your analysis. Key rice export market is Middle East and not US/Europe and hence market share in Middle East matters.
Agree LT foods is doing good things in US/Europe.
Disc - No investments in either.
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Can the legal minds in this forum comment on the worst case scenario if Mr. Gupta and/or KRBL Ltd. is found guilty? Also, was KRBL Ltd. accused in the original chargesheet, or in the subsequent eight supplementary chargesheets?
Thanks
Disc.: invested
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There will be an hearing on May 5th for this 9th supplementary complaint. I think irrespective of Q4 result or bail stock price may slowly fall further down for few months. Definitely its going to test the risk, fear and patience level of investors.
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I spoke to Mr.Raman Sapra twice, had detailed discussion about the ongoing situation. He calmly replied, all issues will sort in a matter of time, not sure when it is though. Already down more than 72% cmp to its all time high price since 2017. Any positive developments like granting Gupta Bail, improvement in the Quarterly results will arrest the down fall, also i spoke to Mr.Sapra about dividend & buyback, considering the current situation only a dividend can be expected, he said. But still at last he said, its a cash rich company, for sure it will get out of this mess and expressed his confidence. Once gupta is out, both Mr.Gupta and Mittal interview will clarify the direction of share momentum. I am anticipating that legal expenses will shoot up this Quarter, as they hired high class legal advisors.
Disc: Invested.
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thanks for the details Gopinath. I have 2 questions from your message.
When they say, considering the current situation only a dividend can be expected - Does it mean usual dividend of 12% from profit or more than that this time? I don’t think they can give more because they wants to increase the inventory for better revenue
Do you know any rough number of legal expense?
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It seems like as mr.gupta comes out everything will disappered ??
Do u think with out any considerable offense ED has locked director of 5000cr company?
According to u what they have written in total 9 chargsheets??
Disc. NOT INVESTED
Hello @Kuldeepjadeja if you cross-check my message properly, Where did I say, everything will be solved, I am sharing the conversation between me & CS of KRBL. No one is sure here, what additional impact it would cause post 5th May Judgement. The entire case is behind 600Cr bribes routed through various channels. I am convinced that it will withstand this crisis and continue to be the leader. So, I am holding my investment. I knew that M/s KRBL DMCC and M/s KRBL Limited showing their involvement." is mentioned in the chargesheet. We will only get a clear picture if Mr.Gupta is released on Bail which is due today and giving an interview along with Mr.Mittal to the investor’s group. Till then it’s a patience game. Please note, the judgement is still due, on May 5th 2021.
@remi if we recall the last concall, KRBL is heavily invested in procuring paddy. I am not sure what percentage of dividend they will announce this time. I tried to ask this, I didn’t get a proper response. We have to wait for the results announcement. Regarding the legal expenses, i am not sure, but they hired Vikas Pahwa who is Senior Advocate | Supreme Court and Delhi High Court | 3rd Generation lawyer with over 27 yrs exp, also who is dealing with Mr.Shashi Tharoor case.
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