Buy IFB Agro Industries; target Rs 240: Sunidhi Securities
Sunidhi Securities is bullish on IFB Agro Industries (IFBAIL) and has recommended buy rating on the stock with a target price of Rs 240 in its February 22, 2013 research report.
February 23, 2013 / 15:56 IST
Sunidhi Securities is bullish on IFB Agro Industries (IFBAIL) and has recommended buy rating on the stock with a target price of Rs 240 in its February 22, 2013 research report.
"IFBAIL was incorporated in 1982 under the name 'Nag Bottling and Packaging Company'. It became a public limited company in 1986 under the present name. It is engaged in the manufacture and marketing of extra neutral alcohol, Indian Made Foreign Liquor (IMFL) and other agro products. The alcohol and spirits business account for nearly 70% of the revenue. On IMFL, IFBAIL has strengthened its position in West Bengal, Orissa and Assam. Industrial alcohol has a wide variety of uses mainly in the pharmaceutical, chemical and homeopathic drug making industry. It is also used in the manufacture of a number of other organic components.IFBAIL offers Vodka, Gin, Whisky and Rum flavours. There are at present two categories in which the corporate operates, the above 25 and the above 50 category. On IMFL, IFBAIL's 'Volga' brand Vodka is the largest selling premium branded vodka in in West Bengal, Orissa and North East. Its brands include Blue Lagoon Gin Lemonade and Blue Lagoon Gin Orange, Old Pirate Whisky, Gold Cup Doctor's Brandy, Baluba Rum, 3 Cheers Whisky and Russki Vodka. For the future growth and huge potential demand of Rum and Brandy, it has launched 'Jubilation' Rum in Bengal and “Benjamin' brandy in Orissa.During Q3FY13, sales have gone up by 16% to Rs 101.1 crore from Rs 87.1 crore in Q3FY12. PAT fell by 14.6% to Rs 7.0 crore from Rs 8.2 crore in Q3FY12. EPS for Q3FY13 stands at Rs 8.8 Vs Rs 10.3 in Q3FY12. During 9MFY13, PAT surged 9.9% to Rs 28.9 crore from Rs 26.3 crore on 9.1% higher sales of Rs 367.8 crore Vs Rs 337.1 crore in 9MFY12. OP and NP margins stood at 12.9% and 7.9% Vs 13.7% and 7.8% respectively in the previous corresponding period. 9MFY13 EPS stands at Rs 36.1 Vs Rs 32.9 in 9MFY12 and Rs 40.1 in FY12. 9MFY13 net profit and EPS is calculated after excluding one-time impairment cost of Rs 1.8 crore for closed bottling units and Rs 4.9 crore one-time settlement cost of workers on closure of bottling units.The new state-of-art bottling plant at Dankuni, West Bengal is producing brands of Diageo India (P) Ltd and United Spirits. In IMFL, IFBAIL visualizes ample opportunity but at the same time it wants to consolidate and intends to move to other states. To establish its position further, it is concentrating on quality and packaging of the product. IFBAIL is continuing its efforts to attain further efficiencies in fermentation and distillation, improve upon its bio-gas generation to reduce fuel cost, and to further improve power generation to reduce the cost of production and to attain the zero discharge norms.The increased bottling capacity, once the Panagarh (West Bengal) plant becomes operational will bring good opportunity to IFBAIL by way of volume growth and market share in the country liquor segment. The demand for Alcoholic Beverages has been growing at a steady pace of approximately 10-15% p.a. and this growth rate is expected to continue to sustain in the future. IFBAIL has on 22 February 2013 allotted 99 lakh shares to the promoters and associates at a price of Rs 182, which will increase equity capital to Rs 9 crore and the promoters holding by 5% to 60%. The allotment of shares at a price of Rs 182 (Rs 172 premium) has exuded lot of confidence in the mind of shareholders. At the CMP of Rs 180, the share is traded at a P/E of 4.1x on FY13E. We recommend BUY with a target price to Rs 240 in the medium term," says Sunidhi Securities research report.Institutional holding more than 40% in Indian cos Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.To read the full report click on the attachment 
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