Good results for Q3… Check here (by giving some strain to your eyes)-
http://www.bseindia.com/xml-data/corpfiling/AttachLive/Narmada_Gelatines_Ltd_070213_Rst.pdf
Yes, good nos again. Hope the co gives liberal dividend as they don’t seem to be growing and hence must be having good cash flows.
Can someone share the latest quarter results of Narmada. Thanks
Its quite sad the way they submit their quarterly results. Even after straining one cant read(even dec quarter was same)
They are available on their website -http://www.narmadagelatines.com/result.html Link: http://www.narmadagelatines.com/result.html
Even though, Q4 results are modest, on annual basis the results are impressive. Margins have improved due to rising gelatine prices. Over medium term, itappears thatmargins are going to be above average. However, the key question is will it expand capacity as management has been very reluctant in expanding the business.
However, on valuation front, it looks very attractive.
NWC + Cash + Investment = 58 Crores while market cap is 62 crores.
Hence, fixed assets + operating business is available at throwaway price. Add to this increasing dividends and dividend yield of 4%.There is nothing much to lose here!
Thanks & Regards,
Dhwanil Desai
They are available on their website -http://www.narmadagelatines.com/result.html Link: http://www.narmadagelatines.com/result.html
Hi Dhwanil,
Any views on Nitta Gelatin?
itappears thatmargins 4%.There
- Link: http://www.narmadagelatines.com/result.html http://www.narmadagelatines.com/result.html Link: http://www.narmadagelatines.com/result.html
Can someone share the latest quarter results of Narmada. Thanks
Hi all,
How come nobody’s talking abt Narmada any more? The falling rupee will only help the Co. going forward. It is by far the most efficient of all gelatine manufactures in the country having an avge ROCE of over 30%, book value in excess of Rs. 190/-, max promoter holding of 75%. With one share holder Milliner Agencies § Ltd. holding 4.08%, there is hardly any floating stock.
Yes, the co has done pretty well the stock is not being discussed probably as its in call auction and now hardly any activity is taking place.
Hi Ayush,
Lot of value buys discussed here are in call auction in illiquid stocks. In your opinion does this make it a bad candidate for investing. In normal trading the price always catches up its value over a period of time. In recent times since these new guidelines by SEBI makes price catching up quite difficult. Would you stay away from such bets or otherwise?
When I compare Narmada with other listed Gelatine players like India Gelatine, Nitta Gelatine, Sterling Biotec etc, I find it strange that despite being twice as efficient in terms of capital employed, it is available at half the valuation of others.
Hi Mokhtar,
Personally we feel that if the value is actually there then it will get attention and we invest irrespective of the ill-liquidity issues etc etc. In our experience, we have got good returns by doing so and at the same time there has been high opportunity cost for few months/years in some cases. But overall, it works out well for us and worth the pain 
Ayush
Dear dhwanil,
I am a recent entrant to value pickr . Found your analysis on this stock as well as others on these pages and found them a learning experience. Do you still hold Narmada gelatine in your portfolio? On the basis of fy2014 numbers, it is making an ebit of 26 cr against an enterprise value of 82 crs. Assuming a 10% growth rate, it will return the market value within 3 years. With a p/e of 6, p/b of .99 and price sales ratio of .71 , it looks like it can be a multi bagger even after th current upward movement. Please let me know your views
Regards,
Seshu
itappears thatmargins 4%.There
-http://www.narmadagelatines.com/result.html Link: http://www.narmadagelatines.com/result.html
Can someone share the latest quarter results of Narmada. Thanks
Perhaps the biggest criticism against Narmada could be the very low dividend payout ratio, despite sitting on large amounts of cash & with no immediate plans of any major expansion. One positive is that the Co. is sitting on 80 acres of land in Jabalpur. The promoters (heirs of the late Manu Chhabria) have been looking to sell the Co. for the last 5-7 years. When that will finally happen is anyone’s guess. To me it makes sense to book at least partial profits at current levels of 232. (I agree that it’s a dangerous suggestion to make in a bull market!!)
Board recommends bonus of 1 share for every 2 held. Stock up by 15%. Q1 results are flat because of sharp increase in RM Cost.
@desaidhwanil I request you to share your point of view regarding this company now. I was screening about few good companies under 100cr. and found this company.
I have read all 55 replies on this thread and found your research most detailed. I would love if anyone else can add value to it.
Until FY14, the company was increasing it’s OPM but in FY15 the OPM is 15.62% compared to 18.56% of PY.
@ayushmit Can you add something here?
Please share your views. Thanks.
Hi Mihir,
NG is in a commodity business and will always be prone to commodity prices (i.e. gelatine). There was considerable price increase in gelatine in FY 13 & FY 14. However, from what I understand, the prices have been stable and/or slightly lower than FY 14.
Another thing to keep in mind is that the growth is not coming through as the capacity addition is not taking place. From whatever I understand, it is likely to remain so as long as the current promoters are there (as it is a very small company in overall scheme of things for them). The only catalyst will be the change in promoters or any clear signs shown by promoter that the focus is going to be on growth.
When I looked at this business, it was a deep value buy and it was a bet on sheer undervaluation. Hence, I exited as soon as the deep undervaluation theme was gone and stock got re-rated. I am not sure about current valuation, however, my personal take is that it remains a commodity business combined with lack of growth mindset of promoter, hence unlikely to command high valuation. May be 8-10 P/E at the max, unless the growth returns and/or company buyout happens.
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Hi Mihir,
Dhwanil has summed it up well. I still believe that its one of the better cos in the whole gelatin space as they have the most stable and consistent performance plus the business generates good amount of cash. Like Dhwanil, I had also bought as it was really cheap and the numbers were improving. However, I have been disappointed with the dormant status of the company - despite having so much of cash flow there is hardly any expansion or increase in dividend payout or any guidance on better utilization of the same. It seems management is not focused on this one. I have exited from the stock as I had better options.
If there is more clarity on the above issues then it may be a good idea.
Regards,
Ayush
Just to add to Dhwanil’s point, management (as per interaction in Sep’14) had a plan to increase capacity from 2,500MT to ~2,800MT over next 3-5 years. So low expectations from volume growth.
On realizations, Mr Chaudhari said “we do not expect any more growth in realizations as the gap b/w domestic and imports is almost merged now”.
Hope that helps.
Best
Rajat
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Thanks Rajat for this input. Matter is closed for me.