Thursday 30 May 2013

Investment Ideas - Marico Limited


 Marico Limited (ML)

Marico Limited (ML), is one of the leading Fast Moving Consumer Goods (FMCG) player in the Indian Market. The company was incorporated in the year 1988.at the time of incorporation it was known as Marico Foods Limited. The name Marico Industries Limited came into being in the year 1989. . In the year February 2004 there was an  Amalgamation of Anandita Arnav Trading & Investment Private Ltd, Madhav Nandini Trading & Investment Private Ltd, Rajvi Rishabh Trading & Investment Private Ltd and Rishabh Harsh Trading & Investment Private Ltd.

Marico's Products and brand names are well known to the Indian household. Brands like Parachute, Saffola, Kaya, Sundari and Fiancee enjoy good consumer confidence and trust. Significant market share is enjoyed by these products.  Marico has built up extensive marketing network more than 20 countries in the Middle East, Asian sub-continent, Australia and USA.

In 1989, the company acquired  Rasoi Industries Limited. In 1990, the company entered into an agreement with Bombay Oil Industries Ltd (BOIL) for the use of the brands Parachute and Saffola. The Company established a new plant in Kerala to manufacture Parachute Coconut Oil. This is a good location because Kerala is a state with large coconut plantations. The Kerala unit has the capacity to produce  24000 tonnes of coconut oil per annum. In the year 1995, Marico acquired the Brand SIL' from KFL.

Marico introduced two products in 1997  Sweekar cotton seed oil and Sweekar mustard oil. The company established two separate production units one at Jalgaon to process the cotton seeds and another one at Jaipur for the mustard oil. in the year 1998 the Company made the joint venture between a Lever group company and Nissin of Japan enabling its products distribution through HLL's networks. Marico acquired the company Sundari LLC in 2003 In the year of 2004, the company launched new products like Silk-n-Shine.

In the year 2006, Marico acquired Hindustan Lever Limited's Nihar for Rs 216 crores. In the following year, the company forayed into South African market. Marico also acquired the consumer division of Enaleni Pharmaceuticals. In the year 2008 Marico made some change in the business style. It sold its processed foods business, Sil' to Good Food Group.  By making correct decisions on acquisitions and mergers the company has managed to corner a market capitalisation of 14,772.37 Crores, which is very impressive and third largest after Godrej and Dabur. 

As on 30th April the following Mutual funds have invested in Marico. 

Franklin India Prima Plus - (G)                                           1854.40 Cr
Birla Sun Life Midcap Fund - Plan A (G)                           1096.97 Cr
HDFC Mid-Cap Opportunities Fund (G)                            2647.68 Cr
UTI-Dividend Yield Fund (G)                                              3302.10 Cr

Looking at the available financials Marico has seen growth of 9.7% yoy during Q4 FY13. Revenue from international business seems to have declined by 1%. Profit before tax has increased from last year’s 1088 to 1189 Crores. The profit after tax has been adjusted to 507 which is lower than the last years’ 714 Crores. Profit after tax (PAT) is adjusted to 5.1%.
According to the available financial data, the material cost has declined from that of last year. The personnel and advertising cost have slightly increased form that of last Q4. 

Marico believes in the coming FY14, it could see larger volume growth. The company’s interest costs remain unchanged from that of last year. However this could be reduced in the coming FY14.

At the time of writing this note the shares of the company had closed the trade at 229.75. Since the beginning of this year this stock has been moving sideways. This stock is ideal for short term investors. For traders I would say  a buy could be initiated around Rs. 213, which is a good support. A target of 237 can be marked for exiting the stock.
 

Tuesday 28 May 2013

Investment Ideas - Blue Dart Courier



This company was started in the year 1983 under the name Blue Dart Courier Service. The Company was promoted by Tushar Jani, Clyde Cooper and Khushroo Dubash. In the beginning it was a partnership venture. Later it became a public limited company on June 15th, 1994 and started functioning under the name Blue Dart Express Ltd.Blue Dart Express Ltd has become Asia's leading air express carrier and logistics-services provider.

The company has over 200 offices and 168 franchisees. In addition to this it has 173 service participants. The company operates from 6 warehouses and 9 hubs. It total it has built up 422000 sq. feet of facilities to cater to its customers. The Company has set up customs bonded warehouse at Chennai, Mumbai and Calcutta and trans-shipment facilities at all major domestic airports through which it operates. In addition to this the company has agreements with international carriers like, Air India, Air France, British Airways, Emirates, Singapore Airlines Swissair, South African Airways, Air Canada, Cargolux Lufthansa, China Airlines and FedEx for movement of air cargo.

The company’s domestics operations cover over 13800 locations. The company has a tie up with the US Company Federal Express International with exclusive rights for providing pick-up and delivery services in India. Federal Express is a well known brand name in over 220 countries.
The company has an agreement with Franch Express, a courier operator in South India. This arrangement helped the company to add another 1000 locations in the southern region. It also has an agreement in place with Crown Couriers, a courier company in North India whereby additional 74 locations were added to network in North India.

Blue dart has its unique tracking system known as COSMAT which is a satellite based communication system. All domestic shipments are tracked via this system. In addition to this there are other products too. Voice Dart, Power Dart, Dart Collect, Dart Apex are some of its products. 

The company has seven aircrafts (acquired on lease) for its operations serving 60 air routes
During 2004-05 DHL Express (Singapore) Pte Ltd acquired 81.03% equity stake of the company.

In the year 2005, Blue Dart Aviation Ltd ceased to be a subsidiary of the company. Subsequently, Skyline Air Logistics Ltd and Concorde Air Logistics Ltd became subsidiaries of the company.

Starting from 2005 the company added new regional head offices in the Northern region, and the Southern region. New facilities came up in the cities of Delhi, Bangalore, Ahmadabad, and Jaipur

In the year 2005-2006, the company divested 60,000 Equity Shares ( 100% of Equity Capital) of Skyline Air Logistics Ltd, for a sum of  Rs.4.42 million. Consequently, Skyline Air Logistics ceased to be a subsidiary of the Blue Dart. 

According to the available data, the total income of the company is 2206Cr. Total expenditure of the company is 1900Cr. The reported Profit after Tax is 189Cr. The EPS is at 79.5. the dividend history of the company is also very impressive. In 2011, it paid 10%, in 2012, it paid 20%. This year it has decided to pay 710% (Rs. 71 per share). The face value of the share is Rs.10.

This company has also found place in the following Mutual funds:


SBI Contra Fund (G) (202,842 Shares)

The past performance of the company has been very  impressive. From 2009 the value of this share has increased 6 fold. At the time of writing this note its shares are trading at Rs. 2587.  Although traded in low volumes, this company’s shares could be  bought as an investment or for short term benefits.

Dis: I do not hold any shares or interests in this company.