Moneycontrol
Apr 17, 2017 02:40 PM IST | Source: Moneycontrol.com

INSIDER WATCH-Advanced Enzymes promoter ups stake; sign new biz is doing well?

The management is quite upbeat about its foray into newer segments like palm oil extraction and bio-diesel

INSIDER WATCH-Advanced Enzymes promoter ups stake; sign new biz is doing well?

Jitendra Kumar Gupta

Moneycontrol Research

Despite higher valuations, the promoter of Advanced Enzyme Tech, Chandrakant Rathi has been continuously accumulating shares in the company from the open market. The promoter’s stake has increased from 19.25 percent in March to 21.7 percent.

Advanced Enzyme Tech manufactures enzymes used in different industries like healthcare, nutrition, baking, fruit & vegetable processing, brewing and malting.

At the current market price of Rs 2,058 per share, the stock is trading at 35.4 times its FY18 estimated earnings and slightly above its consensus target price of Rs 2,015 a share.

The company got listed last year in August last year and saw a listing pop of 35 percent at Rs 1,210. It has since seen a sharp up-move in its share price as it was the only listed player in the high entry-barrier business of enzymes in India. The company had pristine financials to boast

The company had pristine financials to boast of: Negligible debt on its books, an operating margin of close to 47 percent and return on equity of 33 percent. It attracted serious investor attention, although the extent of the run-up in its stock price may have turned some a tad skeptical in recent times.

The Street is projecting 33 percent earnings (consensus estimate) growth over the next two years. However, this is on the back of growth from the current product portfolio (like nutraceuticals, accounting for 70 percent of its revenue).

The management is quite upbeat about its foray into newer segments like palm oil extraction and bio-diesel, which they feel would be big drivers of future growth and profitability.

Is the recent management action an early signal of strong growth in the new segments that the Street hasn’t factored in yet?
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