Piccadily Agro Industries Ltd

Hey guys,

Resuming the thread on this stock. In the most recent annual report, it looks like the sugar business enjoyed 4x growth while thealcoholbusiness experienced a 20% de-growth. Is anyone still tracking the company and know what’s going on here?

http://www.bseindia.com/xml-data/corpfiling/AttachHis/Piccadily_Agro_Industries_Ltd_290513_Rst.pdf

Cheers,

-Prasanna

Hi,

Yeah, the co had a poor last year as the prices of country liquor are state controlled and as per some industry people, it was not revised and players were under pressure. As per recent announcement by co, the prices have been revised and co expects a good year ahead.

Ayush

The company had a phenomenal last quarter. EPS is up 70% yoy. But more importantly the liquor division did very well - 12% sales increase yoy, with a 135% net profit increase. The stock appears highly undervalued if the growth rates are to continue.

@Ayush: Do you have any further insights here? A few queries from my side:

)- The margins on the liquor business seems to have improved to 17% (up from 8%); This was probably due to pricing improvements that you had mentioned earlier. Is this sustainable in the near future? Is there possibility of upward improvements?

)- The revenue growth has been quite modest. Once margins stabilize (around 17-20%?) are there any triggers in place that can improve revenue growth in this story?

)- I know you (and other senior valuepickrs / ben graham himself) advocate the idea that the market is usually right over the long term – 2-3 years. This one seems to be punished for a long time. Is there something I’m missing / recently changed? The liquor segment overtaking profits seems to be 2 years old?

Thanks,

-Prasanna

Hi Prasanna,

The positives you have highlighted. The negatives are -

1). The co also has a sugar division which is unpredictable and can churn out losses (like it happened in Q2FY14)

2). The promoters are politically linked and hence there is always a question mark on the ethics and taking care of minority

3). One of the family member was the guy behind the Jessica Lal murder case.

Regards,

Ayush

Disc: I’m invested.

)-

)-

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PIAL recently acquired wine brands from a reputed company. PIAL has taken all steps in right direction… I.e. Sugar > Country Liquor > IMFL / established Wine brands. Acquiring established Wine brands seems to be a better step than creating IMFL brands from scratch.

Sugar to Liquor categorization and related re-rating has not happened as yet, but looks like that should take place very soon.

Valuations ran up after acquisition, but expecting to come down to Rs 26-28, at which point I would plan to buy.

Any views from regulars on this thread?

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Yes, the direction is very interesting…lets see how things unfold over next few years.

Ayush

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Hi. I have tried looking into the company’s recent acquisition ofnirvana biosys. There is no further information available than the fact that it has bought over 89% of the company and the said co. is now a subsidiary. There are no numbers disclosed.

I am new to analyzing companies… so please bear with me.

my question is that - is it ethical for a company to be this discreet about its business deals? How can we as minority shareholders gauge whether the deal is a fair one or overvalued without any data? On what basis can I hang my valuation of the management’s capabilities for making investments - they could squander profits for all I know…

I recently bought @40, after comparing size and prospects of it’s acquired Luca wines, in light of recent acquisition of Sula wines by Reliance (Anil A).

Mr Kartikeya Sharma today resigned from board. As per ARs, he was the only ‘Promoter Director’. Kartikeya was the one who transformed Piccadily into what it is today. I see this event a big -ve… waiting to hear from mgmt as to who will replace him.

option-1) exit now and re-enter after things become clear?

option-2) bet on horse, not jockey, i.e. continue holding and expect current mgmt to deliver.

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Rajul,

Exit of Sharma can be positive too. Investors will start thinking change of mgt can create value and risk profile is low. (no more Sharma in promotors, vanishing memory of past event)

Kunal,

I don’t believe that promoters will change as such. Kartikeya has many, mainly media businesses to deal with.

So either

1- he may want to focus on other businesses, or

2- Some dispute with other promoters.

Stock tanked on this news, ‘should have’ exited :slight_smile:

Stock is expected to consolidate and be range bound for next few months.

I prefer buy on dips and hold strategy for such stocks.

Kunal

Now that we have change of Management structure and rise of Sugar sector, what are the prospects of this company in coming months?

Disc : invested in few shares yesterday.

  • Vimal
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I came across a couple of articles that indicates that they have launched a very well appreciated premium whiskey last year …
Indri-Trini Is The Single Malt Of A Whisky Lover’s Dreams | Traveldine
The site is very nice as well…
Indri Single Malt: Award Winning Whisky from Northern Distilleries India (piccadily.com)
Apparently they have 12000 liters/day capacity and planning to expand storage capacity as well…
"We are currently in the process of expanding our warehousing and coopering operations. We are adding 12 new warehouses and 60,000 barrels in total. This will bring our total capacity to 1,00,000 barrels.
"
It appears that they also have co-produced another brand named “Kamet” …
Whiskeyfellow: Kamet Indian Single Malt Whisky Review & Tasting Notes
Their 2021 AR also mentions both Indri and Kamet .
To me it looks like that they have taken a few good steps towards this premiumization effort and if the accolades translate to sales, things might become interesting.
Anyone still tracking this company or can anyone provide any insight into the popularity of the brand in Goa\Delhi area ? It was launched in Mumbai as well but its been only a few months .

Disc: Interested… looking for information.

Comparing AR’s of 22 and 21 it seems they are progressing well with their whiskies.
They sold 1511 cases of Indri( 19 only in previous year),2646 cases of Kamet(1250 previous year)14103 cases of whistler(9179).
The new AR also says that sugar produced and recovery ratio was lower this year but Sales overall increased from 224 crores to 276 crores.
So seems the whiskies are doing the lifting .
Indri has won 8 awards since March 22 and they have 40000 barrel stock and planning to add 30K more.

Indri came second in this one recently…

Does anyone have any estimate how profitable this can become if it becomes as successful as Rampur,Amrut or Paul John ? I have no clue myself .

Disc . Invested 2% of portfolio

Update: Indri has entered US market as well …

From the link,this part sounds rum :relaxed:
“The distillery is rapidly expanding its warehousing capacity to hold another 30,000 barrels. A new visitor center is also under construction and will be open for visitors by the end of the year. The distillery will also soon launch India’s first pure cane Juice Rum matured for 12 long years in its tropical climate.”

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