Sanwaria Agro Oils Ltd : A Growth Story

SANWARIA AGRO OILS LTD : A Growth Story

CMP : 14.00

BSE CODE :519260

Market Cap : 515 Crores

       LISTED ON : NSE AND BSE

TARGET : 25/36

TIME-FRAME : 12 Months

History of the Company :

Sanwaria Agro Oils Ltd is part of Sanwaria Group, which is FMCG Food Products Company. Sanwaria was originally incorporated on 22nd April, 1991 with its registered cum corporate office in Bhopal Madhya Pradesh, India. The company has three brands name ‘Sanwaria’ ‘Sulabh’, and Narmada. SAOL is an integrated agro food processor having the following lines of business:

• Seed processing and Solvent Extraction
• Producing and selling Soy meal (De-oiled cakes) in domestic and international markets
• Refining of crude Soy oil to produce refined Soy oil
• Distribution and sale of bulk and branded Soy oil
• Producing and selling value added products like Soy Flour, Soy Chunks (Nuggets),Soy Lecithin and Acid Oil
• Producing and selling Basmati Rice in domestic and international markets
• Producing and selling Wheat Flour, Fortified Wheat Flour
• Trading of other agro commodities like Wheat, Gram & Pulses etc

Financials of the Company :

• Profit After Tax (PAT) for the year ended on 31st March,2017 has been reported  at Rs 44.13 Crore against PAT of Rs 15.68 Rs for March,2016.
• Revenue for the year ended on 31st March 2017 has been reported at Rs 3526 Crore which is 31% higher than previous year.
• Owing to substantial improvement in financial performance the company has announced bonus and dividend, proportion of which will be finalized at board meeting on 22nd May 2017.
• Promoters have sensed need for additional capital and so have issued themselves equity shares to the tune of Rs 50 crores on preferential basis at 25 Rs per share in August 2016.

Investment Rationale : Why to Invest in this Stock ??

• Shareholding of the promoters in the company is 71.68% as on 31st March,2017 which strongly indicates interest of promoters in growth of the company.
• Being a FMCG company involved in products like rice, soya oil, flour etc which being a major necessity in nature the scope for expansion is substantial. 
• The promoters themselves have acquired shares on preferential basis @ 25 Rs per share for capital infusion recently which gives us the conviction that stock price shall move up.
• Market Cap to Sales Ratio : 0.15 ( Considering March 2017 sales and current market cap) is very attractive
• At current price of Rs 14 per share and EPS of 1.20 , the stock is presently trading at an attractive P/E ratio of 11.67.
• At a forward P/E of 20 and EPS of 1.6 we expect the stock price to soar higher atleast to 32 levels in coming time.
• As per certain information available in public domain, the Company is a major supplier to Patanjali for various products. It could give company a huge boost in its sales considering the fact that Patanjali is expanding at an enormous pace.

Disclaimer Note: The above is not a research report but information as available on public domain and it should not be treated as a research report. Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations.

Disclosure: It is safe to assume that I might have Sanwaria Agro Oils Ltd in my portfolio and hence my point of view can be biased. Readers should peform own due diligence before investing. We do not assume any responsibility or liability resulting from the use of information , judgements and opinions for Trading or Investment purposes on the Blog.