Despite the egg price rise the stock hit circuit today. Is the market perceiving it differently?
According to a reputed boarder at MMB Manjuvas âMarket is not reacting to Egg Price Increase or Decrease. Market is trying to price in the B2C products that the company is launching. A simple example, Raw potato is sold for Rs. 25 per Kg. Products made from processed potato are priced at anywhere between Rs. 400 to Rs 800 per Kg. Fluctuation in price of potato from 20 to 40 would have marginal impact on bottom line of the company doing value addition in excess of 1000%⌠âyour potential for growth is only limited by your Vision of growthâ. SKM has expanded the horizon of its vision and market is trying to put a value to that.â
the best example is Tata Global and Tata Chemicals, the management focus towards B2C products fueled the rally. Around 4 Percent Equity got delivered from 85 to 97 levels in last one month, and during bad results there is hardly any selling( Volume was low).
Markets are betting on this management which 20+ Year experience.
From outlook article
If there is one thing the cyclical nature of the egg processing business has taught Shree Shivkumar, the founder and CEO of SKM Egg Products, it is the importance of liquidity. âIn my core egg processing business, three good years are followed by two mediocre years almost like clockwork,â he says.
. According to him, these businesses are in their initial stages but have the potential to scale up significantly in the future. âAs I hand over the business to my son in 10 years, I donât want him to undergo the same stress levels that I did and, hopefully, the diversification will help reduce the cyclicality of the core business,â says Shivkumar with a smile.
3 Likes
@spiderman
Is there a particular reason you skipped some lines from the article?
The article mentions that he is pursuing some totally different business like Herbal cosmetics/ ayurveda medicine. This could be a red flag as well for investors that he is trying to look for other business opportunities which might not be related to SKMEgg.
Here are the preceding couple of lines of the excerpt shared by you.
Shivkumar, along with his wife, is now warming up to emerging businesses such as herbal cosmetics and bringing siddha [a traditional branch of medicine from the south] and ayurveda medicines direct to consumers. According to him, these businesses are in their initial stages but have the potential to scale up significantly in the future. âAs I hand over the business to my son in 10 years, I donât want him to undergo the same stress levels that I did and, hopefully, the diversification will help reduce the cyclicality of the core business,â says Shivkumar with a smile.
1 Like
Shivkumar, along with his wife, is now warming up to emerging businesses such as herbal cosmetics and bringing siddha [a traditional branch of medicine from the south] and ayurveda medicines direct to consumers. According to him, these businesses are in their initial stages but have the potential to scale up significantly in the future. â
So these products donât even exist yet and the market has decided to bump the market cap of the company from 216 Crore to 257 Crores?
1 Like
Every Group has lot of unlisted entities, SKM egg products ( Listed entity ) has expanded from small capacity to 7,125 MT Capacity. So i donât feel he his conflict of interest.
The take away point is he has road map for the company in next decade that is too reduce the volatility in earnings. I have vested interest in this stock and for long term.
Nobody can explain one dayâs or one weekâs rally. Only in hindsight one will will know the reasons. I think it is too early to tell if increasing egg prices is the reason for the rally of SKMâs diversification into B2C business. For small cap company like SKM, it could be operator driven rally too.
On a lighter note, please see Jaspal Bhattiâs Youtube video below to understand ârealâ reasons behind any stock price movement 
5 Likes
Too many unrelated / non-value added / speculative posts on this thread. Request @manish962 to help clean all the spam in this thread.
Request ALL to think before posting any spamming or speculative posts.
1 Like
I see excessive speculation and misdirection in your posts. Many of posts are misleading and highlights selective info misleading the forum users.
Also many of your posts ends with speculation of bumper December quarter and very high price targets. This is totally unwarranted and against VP ethos. Please refrain.
I concur with @Mridul and @Marathondreams regarding the purchase of stock in trade. This is most likely the sales to Russia where margins are expectedly low as company is making inroads and yet to be operationally positive. Hence while this is adding to sales, this is pulling down overall margins.
What is baffling here is this was part of Consolidated book and entirely missing from standalone books in Mar 2017. Refer here : http://www.bseindia.com/xml-data/corpfiling/AttachHis/dea2569d-6985-4701-a6e6-db7dde95daa2.pdf
while this has become part of the unaudited standalone results in this year : http://www.bseindia.com/xml-data/corpfiling/AttachHis/e3343349-424b-4a34-8f3c-749e3d53282a.pdf which is difficult to explain.
Again the Netherlands based European subsidiary is for marketing activities with no mention of Egg powder http://www.skmeurope.nl/ while Russia market is catered by the main Indian export oriented entity SKM EGG PRODUCTS
Some things are not adding up. This needs deeper due diligence. This is basically a commodity play with very limited visibility of an emerging B2C optionality at this point.
Users are advised caution and extreme due diligence before looking at this stock for any investment consideration.
9 Likes
I donât have financial background basically engineer by profession. I canât sight that as a reason for mis-interpretation of facts. As soon as Value Pickr Forum boarders flagged it i contacted Company CS through and i got the reply. Same i posted yesterday in mmb. I apologize for that.
Thanks for guiding me 
3 Likes
it could be case of âdiworsificationâ as coined by Peter Lynch
Egg powder prices in USA is 10 Dollars per kg⌠3 avg is 10 to 12 Dollars and Peak is 16 Dollars.
Canât comment on price movement.
I analysed last 5 Years annual report in that under note 12. In standalone results and consolidated results they have mentioned it. But there is no consistency in reporting. I have taken a snapshot of this for your information.
http://www.bseindia.com/bseplus/AnnualReport/532143/5321430313.pdf (Pg.48)
I presented my understanding after some analysis if it wrong i am ready to correct it. I request boarders not to take any buying/selling based on my views.
1 Like
I had visited a goodbuy warehouse today (Bangalore), saw best eggs multiple variants selling at around 11-12 per egg price range. Packing was in the name of SKM UNIVERSAL MARKETING. Asked the warehouse about the skm egg paneer he said it has hit the stores today. I will further follow up on market response. Egg are selling at premium price almost double the price of regular eggs. Anyone know whether these profits are passed on to SKM EGG PRODUCTS.
2 Likes
something is not adding up!!! what you mean by that? it may be your inability to connect the dots due to non availability of info in public domain which does not mean a company reputation is bad, how can you say it is russia business contributing stock in trade? do you have any info from the company? when a company is in stress, they will look for alternative ways to expand their revenue and diversify their business to mitigate concentration risk.
Great work.
Please let us know if you come around SKM Egg Paneer and Liquid Eggs. Both of these products can add stability as well as numbers to SKM and will make the stock a proper consumers company. If thatâs successfully,w e could be seeing this at a major inflection point and upsides can only be imagined, with limited downside.
In my opinion this is a classic case of both forward and backward integration being done through separate promoter companies. Not very good for the public company shareholders. Buying 25% eggs from skm universal, marketing of the products being done by promoter entity. Sure shot profits in both businesses going to promoters at the cost of skm public entity.
Products might or might not be good. But this arrangement is not very much shareholder friendly.
2 Likes