Sunday, May 6, 2012

UMANG DAIRIES - Maintain BUY

UMANG DAIRIES. CMP/LTP 50. Market cap 111 crores.
Had initiated Investment Buy at 25 in Sep`11 with target of 60. Already up 2x .Maintain buy.
Previous posts here 
I would raise target to 65-75 range i.e +30% to +50% upside.Rationale given at the end.
Good results.Details below
India Milk macro need to kept in mind before comparing the results.Milk exports have been banned so there have been some pricing pressure domestically.
But longer term

Q4 Mar 2012 vs Q4 2011 YoY
  • Revenues down 3% ( 48 crores vs 49.6 crores)
  • EBITDA +75%
  • EBTIDA Margin at 12.4% vs 6.9%
  • PAT up +75%. 6 Crores vs 3.4 crores
FY12 vs FY11  - record results.
  • Revenues +47% ( 150 crores vs 102 crores)
  • EBITDA +201% or up 3x ( 15.5 crores vs 5.2 crores)
  • EBTIDA Margin at 10.4% vs 5.1%
  • PAT up +318% or up 4.2x  ( 13.8 Crores vs 3.3 crores)
 Other result highlights
  • Networth turns positive to 14.5 crores. RoE 95%
  • Long Term debt down 55% to 4 crores vs 7.2 crores.
  • Cash up 193% or up 3x  ( 4.4 crores vs 1.5 crores  )
  • Net Debt 0 vs +5.6 crores ( taken only long term debt)
Performance
Performance in chart below. Click to zoom

  • YTD +120%
  • 1 year +250%
  • 5 Year +778%
  • Stock touched all time / life time high of 53.5 on 23 Apr 2012.
Rationale for raising target to 65-75
At current price of 50 , market cap of 111 crores, UMANG DAIRIES is trading at PSR Price to Sales of 0.74x EV/EBITDA of 7x and PE of 8x. This is a big discount ( >50% ) to listed peers - HATSUN AGRO,HERITAGE FOODS,KWALITY - inspite of UMANG having superior fundamentals such as higher margins,earnings growth and debt free status. ( Detailed peer comparison given in earlier post )
A 50% upside target of 75 would lead to UMANG `s valuation ratios being EV/EBITDA of 11.5x, PE of 12x.
Disclosure - I hold UMANG DAIRIES and intend to buy more.

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