White Organic Agro Ltd - Patanjali and organic food play

Company description: (All notes below are form company press release, result release and transcript)
White Organic Agro is the only listed pure organic foods company in India. It moved to pure organic foods business in 2016-end. It is already amongst India’s top 5 producers of Aloe vera. Organic product range includes over 220 premium organic products in 12 major categories and 17 subcategories from its stores, which include grains, pulses, edible oils, fresh vegetables, fruits, ghee, medicinal herbs and capsules, organic health supplements, snacks and many more. Our products are packed at our packaging factory based out of Rajkot, Gujarat which is in close proximity to our farms. The company sells its products under the brand name called “White Organics”.

The company has a mkt cap of around Rs. 100 cr vs an FY18E guidance by the company of 10-12cr in profit.This is because the company recently won a huge order from Patanjali (details and link below).
Patanjali order:
Received prestigious path breaking order from Patanjali Ayurveda
Patanjali Ayurveda has issued an Initial Purchase Order of 500 tonnes of Aloe Vera Pulp to White Organic.

Revenue drivers
The company had 530 acres of farming land in 1Q18-end. It plans to expand its farming size to 1200 acres in next 12-months and 2000+ acres a year after that. Note: the company earns a profit of 50000-100000 rs. per acre, depending on the commodity that is cultivated.

Profit margin expansion drivers:
Currently, the farms are IC-1 certified organic farms which in 3 years’ time will be approved as 100% organic farms and will be certified under IC-3 category and then the export would open-up.

How the IC-3 enhances margin?
Explanation:If I the company is selling a Moringa leaf which is conventionallygrown, I will be able to sell it at Rs. 100 a kg. If it is organically grown, I will be able to sell it at Rs. 135 a kg. But if I do have an organically certified certificate in which I finished 3 years of my organic certification procedure, I will get Rs. 265 per kg of rate as compared to Rs. 135. So this kind of margin are available because it is an export game in which foreign buyers will be interested to buy out your product.

Balance Sheet: Debt free company

1Q18 results:
Company has registered fantastic revenue of Rs. 18.09 crores with a year-on-year growth which
grew by 4049% from our previous 0.44 crores in the same quarter last year. The EBITDA stood
at Rs. 1.51 crores in Q1 FY18 which was increased by 1417% as compared to Rs. 0.10 crores in
quarter one of financial year 17. The net profit for Q1 FY18 stood at Rs. 1.50 crores as compared
to Rs. 0.06 crores in Q1 FY17, growth of 2600% on year-on-year basis. Our EPS in Q1 FY18
stood at Rs. 1.20 registered a growth of 2900% as compared to Rs. 0.04 in Q1 FY17.

History of the company:
White Organic Agro Limited was formerly known as White Diamond Industries Limited which
was incorporated in 1990, which was operating in a diamond business. As you all may be aware
that in the recent past, the whole diamond industry was going through a very tough time and it
was difficult to operate business in such sluggish market. In the year 2012 to 2014, we decided
to look at other business avenues in various industries. Finally, in 2015-2016, we diversified and
shut our diamond business completely to venture into organic farming and retail with a sole aim
to provide unadulterated and pure organic products to the market, directly from our farm to
stores. This process eradicates the whole chain of wholesalers, dealers, distributors, other party
involved in the sales of goods, eventually bringing down our costs.

Farming contracts are still subject to variation /shortfall in monsoon which can affect the companies plans.
The company is yet to get IC-3 and various other certifications that can help the company to achieve next level of growth.
Promoter shareholding is low at 27.5%

Disclosure: Invested today.


The low promoter holding is not very promising. They are not paying dividends also .

Promoters have pending warrants to be converted. Post that, their stake
will be above 40%…regarding dividend… This is not even the first full
year of operations… If their projections become true, i guess dividends
will be provided in the years to come…


Order from Patanjali is bagged by a different company Future Farms and not by White Organic Agro Ltd. I also noticed the name of Vishal Chavda in senior management positions in both the companies. White Organic has recently bought a stake in Future Farms. Further clarity required how the order from Patanjali to Future Farms will increase the topline of White Organic

Company bought majority stake in future farms in july.

White Organic has a 90% stake in Future Farms (Sourced from transcript, available on BSE website). So nothing to worry about Future Farms getting Patanjali order or VIshal Chavda being in senior management of both companies.

1 Like

Yes. That is why the consolidated nos ( includes Future farms and trading
sales ) are much higher than the stand alone numbers…

The stock is currently trading at a P/E of 37 (consolidated; source - moneycontrol) dont you think it is expensive from the valuation front.
Views invited.

It is better to look at forward PE FY 18 which is just 6 months away…At
guided NP of Rs 12 Cr, even at expanded equity of about Rs 17 Cr, the EPS
comes to about Rs 7…And then the PE becomes 12…Caveat - this is assuming
co shall achieve its guidance.

“The acquisition of stake in Future Farms LLP has started showing great results and adding up to the value of the company, as Future Farms has recently bagged order of supplying aloe vera pulp from its Kanpar, Gujarat unit to consumer product manufacturer Patanjali Ayurveda,” company said.

In recent past, the supervisory and inspection team of Patanjali Ayurveda visited and inspected the farms and the pulp extraction unit and had suggested certain up gradation and renovation of the existing pulp extraction facilities.

Following which the company had undertaken all necessary changes to improve the hygiene standards during pulp extraction process.

After final satisfactory completion of renovation of processing unit and inspection, Patanjali Ayurveda has issued an initial purchase order of 500 tonnes of aloe vera pulp.

This is already known (declared on 11 Sep). Results on 14th Nov. Keeping fingers crossed


Very good results today for Q2 FY18

WO Agro results 14th Nov.pdf (1.35 MB)

I have less trust on patanjali.

Hi @slohariwala,

Congrats for a Nicely written story and I was intrigued by it.
However, I accidentally came across an investor’s tweet wrt this company and therefore didn’t dig further. Pasting the link of the said tweet here:

Check out @Gautam__Baid’s Tweet: https://twitter.com/Gautam__Baid/status/930525403013246976?s=09

For your ready reference, I’m also attaching a screenshot of the said tweet alongwith the original/follow up tweet of amitmantri.

I thought it would be better to keep investors alert.

Disc: Not invested



Company has good results and growth is increasing rapidly.I bought at 69 and added more at 80.planning to add more.

Meeting of the Board of Directors of the Company is scheduled to be held on Friday, January 12th 2018.

Amongst other business, the Board will consider, discuss and approve conversion of 50,00,000 share warrants into equity shares.

It would be interesting to see the price at which the warrants get converted.

These warrants were issued almost a year back. If i remember, the price was
Rs 28. This meeting is to approve the conversion now.