AVT Natural: One of its Kind....!!!!!

AVT natural has been on the radar of the investors when it was trading at the price of 170/- and odds. It's current CMP is  310. So the question arises, is AVT Natural is still undervalued.
                                    
                                               The answer to the question will be available to you, once you are done knowing about the company. AVT Natural is in the business of Marigold Oleo-resin, in which it is world leader, Spice Oils and Oleoresins, India's 2nd largest exporter and is entering in Value added beverage business, where it is setting up a decaffenation plant, only third in Asia. The company has seen phenomenal growth in Revenues and net profit in this year, with the 4th quarter result still awaited. 
                                                               
                                AVT also has tie-ups with the biggest consumers of it's product. Like Finlays, which is the world's largest independent trader of tea, has entered in to contract for decaffenation with AVT. McCormick, which is one of the world's largest Spice Oil and Oleoresins consumer. Kemin Industries Inc., which is the world's largest marigold consumer, has also tied up with AVT. Kemin , in fact has an exclusive agreement, where it will procure all its requirement of food-grade marigold oleoresin for production of FloraGlu Lutein from AVT only. Some other leaders which are users of AVT's product are Harris Freeman and Chrysantis Inc. 
                                                    
                                                              The margins in the business are very good, because it is a niche business and thus provides a much needed entry barrier require to maintain one's margin. Another major advantage for the company is that it produces marigold in area of about 35,000 acres through contract farming and boosts of high yield an low costs. It has one of the best model for contract farming.
            
                                          Let's have a look at the performance of the company for last few quarters.
                  
          

	Dec'11	Sep'11	Jun'11	Mar'11	Dec'10	Sep'10	Jun'10
Sales Turnover	57.85	63.87	48.13	53.64	35.41	30.52	18.84
Other Income	0.2	0.02	0.03	0.08	0.02	0.01	0.02
Total Income	58.05	63.89	48.16	53.72	35.43	30.53	18.86
Expenditure	36.86	37.53	28.58	43.97	27.3	24.3	18.65
Operating Profit	21.19	26.36	19.58	9.75	8.13	6.23	0.21
Interest	2.84	0.76	0.86	1.26	1.46	1	0.61
Gross Profit	18.35	25.6	18.72	8.49	6.67	5.23	-0.4
Depreciation	0.96	0.9	0.9	0.68	0.84	0.84	0.84
Tax	6.09	8.65	6.24	2.69	1.76	1.2	0
Reported
PAT	11.3	16.05	11.58	5.12	3.62	3.19	-1.24
EPS	14.85	21.09	15.23	6.73	4.76	4.19	-1.63
OPM	36.50	41.26	40.66	18.15	22.95	20.41	1.11
GPM	31.61	40.07	38.87	15.80	18.83	17.13	-2.12
NPM	19.47	25.12	24.04	9.53	10.22	10.45	-6.57

Clearly the company has given stupendous performance backed by the increase in the revenues and profit margins of the company.

Also let us compare the latest quarter result and YTD results.

  

	2011-12(Q3)	2010-11(Q3)		2011-12(9 mnths)	2010-11(9 mnths)
			% Var			% Var
Sales	57.85	35.41	63.37	169.85	84.77	100.37
Other Income	0.2	0.02	900	0.25	0.05	400
PBIDT	21.19	8.13	160.64	67.13	14.57	360.74
Interest	2.84	1.46	94.52	4.46	3.07	45.28
PBDT	18.35	6.67	175.11	62.67	11.5	444.96
Depreciation	0.96	0.84	14.29	2.76	2.52	9.52
PBT	17.39	5.83	198.28	59.91	8.98	567.15
TAX	6.09	1.76	246.02	20.97	2.96	608.45
PAT	11.3	3.62	212.15	38.94	5.57	599.1

On the back of its YTD results, it is safe to assume that the company will have the EPS of nearly about 50 for the current year. And does the company is trading at the trailing P/E of around 6.

Also, the volume growth will come from its decaffenation business . 

Also the demand of its product is set to increase and not many companies in the world have the capabilities to deliver, the way AVT delivers. the company might not be able to grow in future at such a stupendous growth, and the  growth might tamper to a CAGR of around 20%, but considering that the company is trading at such a low trailing P/E. It makes sense to get invested in it.

Also the promoters of the company are renowned AV Thomas Group, whose another company Neelamalai Agro Industries is listed. The promoters have also increased their stake close to the maximum level of 75%, by creeping acquisition method.

            Thus the company looks very safe to get invested in.

Model for choosing stocks

Hello everybody,
I have disappeared for a long time, but I am back.
Have been busy, completing my MBA.

I am back and will add a lot of companies with detailed analysis, now that I can find some time.
But meanwhile, I want to give you a model, which can help you to eliminate howlers while you are picking up stocks.

I am putting here a link of an excel sheet.
This sheet uses a mixture of fundamental and very basic technical parameters. The idea, is to put emphasis on fundamental analysis, and after fundamental analysis, using some basic tools of technical, and using them to decide whether it is the right time to enter the stock, given the  model has given a thumbs up on the fundamental parameters.

In future, when I can get time, I will update the model and add questions t each parameter and will try and explain the reasons behind each parameter.

Here is the link:
https://docs.google.com/spreadsheet/ccc?key=0AuwMwPnarEAjdE9QMkt3VjBmTGQ0YjNVRjRWRUtwREE#gid=0

Thank You and Happy Investing.