Prime Customer services - in right sector at right time

The organised Retail is growing pretty past. We are accostomed to shopping in modern retail. We see fresh vegetables and fruits in the stores every day. The HORECA sector also needs fresh vegetables and fruits every day. But these people cannot be expected to go to mandi or the farms for their requirement. On the other hand farmers are exploited by middle men all these years. They get very small percentage of price paid by the consumers in the retail market.There is a scope for some organised players to fill the gap and establish a channel between the farmers and modern retail and HORECA. There is also a scope for value addition like grading, cleaning, packing, ripening, transporting etc. There is scope for export also. Prime Customer services Ltd is involved in this space and has quite a number of retail majors as their customers viz.Reliance Fresh, Freshtrop fruits Ltd, Tata’s Star Bazar, Hypercity, National Handloom and others General Trade customer ETC. The company also has Intas pharma and Carona Remedies for other services like packing, C&FA services and manpower management. Because of threat of use of carbide in ripening of fruits, the demand for ripening chambers is likely to increase.
The management has started very small and come to this stage. I did not find any thing negative about the management. The positive about the management is that the company declared a dividend of 20p when EPS was just 93p. This I think can be taken as an indication that the management cares for retail investors.
The company has no long term debt.
It has an asset light business .
It has very small eqiity.
It is one of early organised players in this field.
It has large addressable market
The company reported good growth despite the effect of demonetisation.During the year 2016-17, the IPO proceeds were received on the last day of the year. The amount did not contribute to topline or bottomline but reduced the EPS.The company improved the working capital during 2016-17. The Receivables have reduced considerably despite increase in sales. 2017-18 would be the first full year after IPO. The company has cash of about Rs. 7 cr as on 31 March 2017, which will be used for business development in 2017-18. The impact is likely to be reflected in results of 2017-18.
The company is also concious about capital allocation is evident from the recent board decision.
The link to company website
I did not find any other listed company involved in similar kind of services.

The risks, SME stocks are susceptible to price manipulation. The company carries all the risks associated with the SME stocks. The company has only 255 public shareholders as on 31March 2017. Promoters hold about 58% stake. The risks are covered in more detail in the prospectus.

Disclosure: invested at lower level and increased the holding on the way up


Why their AR not available on the website? HAve you gone through last 4-5 year AR and do you have some insights you can share?
Their business model as i understand is warehousing and processing to a limited extent but with big retail stores setting up their own supply chain where will they stand? What is their USP ?

How that happened ? This company again like many other SME trading at crazy valuation.

Company is making 32 lacs of profits and trading at Mcap of 60Cr , Do you have any justification about this valuation ?

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The company is going to announce on 13th April, the entering into the business of online B2C market for fruits and vegetables. It is in the related field i.e. purchase from farmers, ripening, grading, packing and supplying to modern retail stores. It is a natural extension for the company since all the logistics would be in place already.

The company has also approved two shares for one share bonus issue so as to have paid up capital of more than 10 crore for listing in main board of BSE.

Disclosure: invested

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