Buy Sanwaria Agro Oils; target of Rs 32: Firstcall Research

Firstcall Research is bullish on Sanwaria Agro Oils and has recommended buy rating on the stock with a target of Rs 32 in its April 1, 2013 research report.
 
“Sanwaria Agro Oils Limited was incorporated on 22nd April,1991 & set up a solvent extraction plant with crushing capacity of 200 tons Per Day of Soya bean & other minor oil seeds at Industrial area , Kheda Itarsi and commenced commercial production from 5th December ,1993 . The Company has setup a refinery with the capacity of 75 Tons per day in August 2001& has also received 'BEST CAPACITY UTILIZATION AWARD' from SOPA from financial year 98-99 to 2001-2002 had achieved 103% capacity utilization as against the Industry average of 35 %. Subsequently the soya crushing/refining capacity of the company has been expanded further which is 1000/150 MT per day as on date. The expansion of the capacity was wholly financed by internal accruals. The Sales & profit of the company is also at constant move in upward direction which in turn has created a strong standing of Sanwaria Agro Oils in the Soya Industry. The Company has got the status of One Star Export house & now the company is aiming at the Trading House status. The export of the company mainly consist of Soya De- Oiled-Cake .The company had been honored with 'THE NIRYAT SHREE SILVER AWARD' for the financial year 2001-02 declared by the federation of Indian Exports Organization for Export excellence.  It is ongoing thirst for exports & its decision to concentrate on brand building for its refined edible oil, the company had launched its full range of edible oil under the brand names "SULABH", "NARMADA" & “SANWARIA” to attract different segments of consumers. “Sulabh” and “Sanwaria” is the lower segment brand to attract the lower middle class and “Narmada” is the premium segment brand to attract middle and upper middle class consumer. After receiving favorable response from customers & constant increase in demand of the retail packs, The Company has launched 1, 2 5 and 15 litre/Kg consumer packs in pouch, tin & jar , to continue its ongoing process to outperform the Industry.”
 
“Sanwaria Agro Oils Ltd has treaded to its own manufacturing of Jar for packaging of Soya refined Oil, reported its financial results for the quarter ended 31 DEC, 2012. The Third quarters witness a healthy increase in overall sales as well as profitability of the company. The company’s net profit jumps to Rs.85.53 million against Rs.40.80 million in the corresponding quarter ending of previous year, an increase of 109.63%. Revenue for the quarter increase 11.25% to Rs.3687.54 million from Rs.3314.58 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs 0.25 a share during the quarter, registering 109.63% increase over previous year period. Profit before interest, depreciation and tax is Rs.211.58 millions as against Rs.95.47 millions in the corresponding period of the previous year.”
 
“At the current market price of Rs.28.50, the stock P/E ratio is at 15.97 x FY13E and 11.84 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.1.78 and Rs.2.41 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 9% and 16% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 12.43 x for FY13E and 9.84 x for FY14E. Price to Book Value of the stock is expected to be at 3.34 x and 2.60 x respectively for FY13E and FY14E. We expect that the company surplus scenario is likely to continue for the next years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 32 for medium to long term investment,” says Firstcall Research report.

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