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EQUITY RESEARCH

Karuturi Global Limited

 From Floriculture to Agriculture


INVESTMENT RATIONALE:

 Aggressive Foray into Agribusiness

 Market Leader in Core Business:

 Strategic Business Locations:

 Forward Integration:
INDUSTRY OVERVIEW
 Floriculture
 Agriculture
 Global food Crisis

COMPANY OVERVIEW

 Floriculture Business
 Agri Venture
 Revenues to Start from FY11
 Other Business
 Food Processing
 ISP Division
 Retailing
ANALYSIS
parameter Information Indicate
Sector Floriculture Growth rate Tremandious growth
Global:10-12% potential
India: 40%
Company position Floriculture Market leader
Agriculture
Sale CAGR of above 50% Revenue
Operating margin 32 % Healthy OM
Net Profit(EPS) Aggressive capacity Net Profit growth above
Expansion,Robust 20%
demand
ROCE Last 5 yr average 27% KGL will maintain
Dividend payout Expansion phase 10% stable dividend
req.capital payout
CONT…

Promoter holding 26.7% Confidence of promoter


FII holding 31.5% high volatility in the
stock price
Liquidity daily volume 4 m shares Liquid stock
Current ratio 5.5 company's ability to pay
up short-term
obligations,
Debt to equity ratio 0.9:1 Close to industry avg
1:1
Interest coverage ratio: 16.3 times over the past Low risk
three years
P/E Ratio 8 times Attractive
INVESTMENT CONCERNS

 Political risks
 overall slowdown in economic activity

 climatic conditions,

 adverse movements in foreign exchange

 withdrawal of tax benefits

 execution risks

 funding risks
VALUATION:
 KGL is well placed at this point in time to take
advantage of increasingly positive scenario.

 I expect the stock to trade at higher level in FY11E .

 I recommend ‘BUY’ on the stock with a target price of


Rs 40 .
FINANCIAL INFORMATION

FY07 FY08 FY09 FY10 FY11E


REVENUE 1018 3974 4537 5467 7500
(Mn)
PBDIT(Mn) 448 1388 1544 1983 2700
PAT(Mn) 393 1027 1173 1433 2175
EPS(Rs) 1.63 3.57 3.24 3.07 4.4

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