GauravBlog Logo

A Lion’s eye on the Bulls and Bears

“In India, companies may fall sick, but promoters rarely do!”

Gaurav's Blog

Categories

Dairy

Kwality destroyed 90 % from Rs 160 to Rs 21 in a year !~Blame the Brokers for going broke?

You were looking for 100% gains in a year…Poof ! now you see your Principal evaporating near 100% 

Kwality Limited’s Share Price has evaporated nearly 90 % from Rs 160 to Rs 21 in a year !

Blame the Brokers for going broke?  

Where was the Quality in the first place !...it was clearly basking in the sunshine of the surge in the share price of other Dairy Companies like Heritage & Parag Milk

I recollect how aghast I was when Kwality Ltd was recommended strongly by not one but several well known broking houses in 2016 & 2017 when it was being quoted in the Rs 110 to 140 range.Targets given by them were extremely tempting to succumb to ! ~ one gave Rs 263 ! ~ another projected Rs 200 !

I have often  mentioned this Company at my Fundamental Equity Value Vs Price Training Workshops when illustrating severe Corporate Governance Issues

A few months ago on March 27, 2018 Kwality had responded to the Exchanges on their concern of falling share price that there was no strategically significant development in the organisation or business & that they were committed to deliver sustainable value to its shareholders at all time…Wow!

The Problem perhaps was on news of Promoter Dhingra pledging shares…or the Company complaining to the exchanges that a broker was fradulently selling shares in the market .Earlier this month Kwality has also been put on the Additional Surveillance Measure (ASM) List.Their June 20,2018 Board Meeting to consider buyback and /or Bonus has been rescheduled to July 3,2018 as majority of the Directors could not make it

What’s going on here !

The Exchanges have just been notified of a downgrading of credit rating by Brickwork .It was just two months ago in April 2018 when Brickwork had given their last ratings  

Today Kwality  was  on lower circuit at Rs 21.15 with heavy volumes before opening up to hit upper circuit & closing a little lower at Rs 22.95 on BSE…relief rally or someone finds real value now !? …52 Week High was @ Rs 160 a year ago…that’s nearly 90% wealth destroyed  from a Market Cap of  @ Rs 3800 crs to just above Rs 500 crs !

This is not to condemn the Broking Houses or vilify them…after all the Money & Risk is all yours…no one held a Gun to your head to invest in Kwality !…so don’t blame the brokers for going broke in this ! even if they had any vested interest in recommending the Company for Investment

Just to warn you not to be carried away by momentum & sentiment in bull markets & follow anyone blindly read more

Monsanto to pay US $ 93 m for poisoning US Town Nitro with dioxin a chemical byproduct of the toxic Herbicide Agent Orange

Monsanto to pay US $ 93 m for poisoning US Town Nitro with dioxin a chemical byproduct of the  toxic Herbicide Agent Orange 

Residents of this West Virginia Town have a right to file individual suits against Monsanto if medical tests show they suffered physical harm due to dioxin exposure.

Monsanto is under seige too for using Glyphosate…. another deadly toxin used in Monsanto herbicides such as RoundUp

India needs to be aware of these developments as Monsanto is very active in India and this giant biotech company is right up there in genetically modified production of crops….Bt Cotton and Brinjal for instance……and there is a raging debate in India to go ahead full fledge on this

Monsanto India is a listed company at Rs 2000 with a Market Cap over Rs 3400 crs…FY 14 saw Sales of Rs 582 crs and Profit of Rs 123 crs with an EPS of Rs 71…Equity is low at Rs 17.26 crs (FV Rs 10) with two Monsanto Companies holding an aggregate of 72.14% of the Equity ….Reserves are Rs 327 crs and Book Value is Rs 200….PE works out to 28 and PBV to 10….It’s a Zero Debt Company and paid 30% Final Dividend and a 120% Interim Dividend

Monsanto Controversial Chronology is briefly documented here

Two Interesting Names come up on the Board of Directors of Monsanto India:

R C Khanna ~ As on June 30,2014 held 389976 Equity Shares  or 2.26% Equity Stake => worth Rs 80 crs today

He is the Non-Executive Director. ~A Cost & Chartered Accountant from England & Wales ~he retired as the Senior Partner of M/s. A.F. Ferguson & Co., Chartered Accountants, in 1989 (Merged into Deloitte ). He joined the Board of MIL in 1975.

Pradeep Poddar

He is the Non-Executive Independent Director ~ A Chemical Engineer from UDCT, Mumbai and an MBA from IIM, Ahmedabad ~  served as part of the top-management at Glaxo, Heinz and the Tata Group. He is presently the Managing Director of Mount Everest Mineral Water Limited, a Tata Enterprise and is leading the Tatas’ foray into water and functional beverages globally. He represents the Tatas’ interest on the Boards of Nourishco, the Joint Venture Company with Pepsico and the Rising Beverage Company (Activate Beverages) in USA. He is also a trustee on the Board of United Way, Mumbai. He joined the MIL Board in January 2006.

There were 15770 Shareholders at June 30,2014 including the Two Promoter Monsanto Holding Companies

Wonder why the controversial Monsanto remains Listed and thus more in the Public Eye ! read more

No Sugar ? What is my Alternative Sweetener ? Sugar Free or Equal or Splenda ?

No Sugar ? What is the Alternative Sweetener ? Sugar Free or Equal or Splenda ?

I use Splenda  especially as it does not contain Aspartame( a combination of two amino acids,aspartic acid and phenylalanine. Amino acids are the building blocks of proteins and are found naturally in many foods.Aspartame though approved by US FDA with prescribed daily intakes,has been perceived to be responsible for causing many Health issues , even Cancer…though tests are not conclusive

http://www.cancer.org/cancer/cancercauses/othercarcinogens/athome/aspartame 

Those who cannot consume Sugar because they are Diabetic or prefer low or no calorie sweeteners routinely turn to these three popular alternatives  :

  • Sugar Free Gold Low Calorie Sugar Substitute claims to be India’s No 1 Sweetener ~ It is made from Aspartame,a protein derivative ~ A 0.75 g sachet is equivalent in sweetness to two teaspoons of sugar and contains 2.8 calories instead of 40 calories that the two teaspoons of sugar hold ~ not recommended for Children and not meant for Phenylketoneurics.Ingredients are Lactose,Aspartame and Polyvinyl Pyrrolidone…..Phenylketonurics are people who have PKU disease. People with this disease cannot digest the amino acid phenylalanine properly, so if they eat too much of it, it could build up in their brains and cause mental problems. The warning on the wrapper is warning these people not to eat that product so they can avoid ingesting phenylalanine.
    PKU disease is a genetic condition, and it can be easily discovered through a blood test ~ Sugar Free Gold is manufactured and marketed by Zydus Wellness,Sikkim which is part of the Cadila Pharma Group of Gujarat
  • Equal is a low calorie sweetener ~ Each Sachet of 1 g contains 36 mg of Aspartame and it’s 4kcal is equivalent in sweetness to two teaspoons of sugar that is 32kcal.The ingredients are Lactose,Aspartame and colloidal silicon dioxide.It is not for Phenylketoneurics and not recommended for Children.It is manufactured by Qualicare Pharmaceuticals Ltd,Medak,Andhra Pradesh and marketed by Merisant India Pvt Ltd,New Delhi
  • Splenda is a no calorie sweetener that is ideal for the whole family ,including Children,Pregnant and Nursing Women and even those with Kidney,Liver or Cancer Issues.It does not contain Aspartame.It gets the sweetness from Sucralose and also contains Dextrose and Maltodextrin.Each Sachet is 1 g and suitable for people with diabetes.Splenda is distributed by McNeil Nutritionals LLC,Foret Washington,PA,USA.Sucralose is made from a patented process from sugar to a no calorie and no carbohydrate sweetener.Sucralose does not have the after taste bitterness associated with other alternatives to sugar like saccharin and acesulfame K and unlike Aspartame can hold up to heat and thus can also be used in cooking and baking.After 20 years of Research  and over 110 scientific studies it is now allowed in over 80 countries.The US FDA and WHO do not require it to mention any warnings or restricted use on it’s labels.Also it has no expiriy date unlike other sweeteners that need to be conumed within one to three years of manufacture .You can check out why Splenda is a preferred sweetener to others at this link on their website http://www.splenda.com/faq/no-calorie-sweetener   
  • read more

    November 2013 Posts in three Free Access Modules ~ Scrip Standpoint ~One Company under Scrip Tease ~19 Companies under Scrip Watch

    Check these November 2013 Posts on our Website in the various Free Access Modules

    Scrip Standpoint Module ~ Four Week Ending Posts and Four Specific Posts 

    Scrip Tease Module ~ One Company

    Scrip Watch Module ~19 Companies ~ These are not committed SS Selects that Clients have access to in Other Modules 

  • Lupin @ Rs 853 ~ ‘Lupin’ Good ! ~ Pin Up Pharma Poster Scrip Maybe ! ~ 28-Nov-2013
  • Technocraft Industries @ Rs 103 ~ The Best is Yet to Come says the Company ~ but will it!? ~ 27-Nov-2013
  • Redington India @ Rs 68.55 ~ Riding on Apple!? ~ 25-Nov-2013
  • Max India Ltd @ Rs 200 ~ Revives halfway between 52 Week High/Low ~ 22-Nov-2013
  • Jubilant Life Sciences Ltd @ Rs 119 – Price Surges on Delisting News ~ 22-Nov-2013
  • Sintex @ Rs 30 ~ Poised for a Turnaround? ~ 21-Nov-2013
  • Sobha Developers @ Rs 312 ~ Better Positioned than Peers ~ 21-Nov-2013
  • IL&FS Transportation @ Rs 117 ~ Sluggish Relative Valuations in a Sluggish Scenario ~ 20-Nov-2013
  • JP Associates @ Rs 49.6 ~ Building market expectations! ~ 19-Nov-2013
  • OCL@ Rs 139.55~Dalmias Cementing Stake Steadily ~ 18-Nov-2013
  • Coal India @ Rs 274 ~ Q2 Result Update ~ 16-Nov-2013
  • Heritage Foods @ Rs 181 ~ Profitable Dairy Segment but Loss making Retail Segment ~ 15-Nov-2013
  • Aurobindo Pharma @ Rs 282 ~ Yet Valued at a Discount To Peer Group despite Good Growth Potential ~ 14-Nov-2013
  • Suven Life Sciences @ Rs 69.9 ~Sixfold Rise in Q2FY14 PAT ~ What else lies ahead! ~ 13-Nov-2013
  • Ashok Leyland @ Rs 15.25 ~ Sliding Through Tough Times ~ 12-Nov-2013
  • Mangalore Chemicals @ Rs 53.3 ~ Juggling with Control Issues ~ 11-Nov-2013
  • Ashoka Buildcon @ Rs 53 ~ On Reformatory Roads ~ 06-Nov-2013
  • Oriental Carbon and Chemicals @ Rs 117 ~ Does it Deserve to be traded in the PCA as an Iliquid Scrip ? ~ 05-Nov-2013
  • Tinplate Co of India @ Rs 46 ~ Will it ever break away from a Narrow Quoted Range ? ~ 05-Nov-2013
  • read more

    Insiders in Heritage Foods ~ up from Rs 300 to Rs 450 levels in a month ! MNC takeover?

    Insiders in Heritage Foods ~ up from Rs 300 to Rs 450 levels in a month ! MNC Takeover?

    Bulk Deals in Heritage Food a few days ago…….

    01/11/12 KOTAK INDIA FOCUS FUND  -193397  at Rs 390.00

    01/11/12 ASHISH RAMESHCHANDRA KACHOLIA  +194000 at Rs390.00

    31/10/12 KOTAK INDIA FOCUS FUND – 248525 at Rs 385.00

    31/10/12 KOTAK INDIA FOCUS FUND  – 84500 at Rs 380.18

    I had blogged on this just a fortnight ago on October 22,2012

    Heritage Food is flying high at Rs 360+ surging over 130% in 100 days since Director’s wife picked up 50000 shares at @ Rs 155 !

    The Price is running away from what Valuation indicates…..and it could only mean one of three…

    • It’s close to being acquired by a MNC like HUL or Nestle ~Company has been actively wooed in the past
    • Non Linear Growth in Earnings going forward ~ How? ~ Check my recent blog post linked above
    • Market Machinations ~ Definitely evident

    Check out the BSE Trading Pattern from October 1,2012 below

    Interestingly on the trading days highlighted in Bold Green where the Volumes have been abnormally high ,the Delivery % has been quite low except for the two days when the above bulk deals were done !

    The Volume on BSE today also was high at 88000 shares with price surging to a record Rs 450 before closing at Rs 444+

    HERITAGE FOODS (INDIA) LTD
    Period: 01-Oct-2012 to 06-Nov-2012

    Date

    Open

    Rs

    High

    Rs

    Low

    Rs

    Close

    Rs

    WAP

    Rs

    No. of
    Shares

    % Deli. Qty to Traded Qty

    1/10/12

    306.95

    309.05

    298.50

    299.55

    302.40

    10,745

    47.42

    3/10/12

    304.00

    313.00

    302.00

    304.90

    307.46

    10,650

    30.77

    4/10/12

    303.10

    315.80

    303.05

    305.70

    309.43

    13,611

    39.37

    5/10/12

    309.90

    309.90

    295.00

    299.10

    299.57

    5,930

    44.86

    8/10/12

    302.85

    308.00

    290.00

    293.80

    300.63

    12,080

    36.54

    9/10/12

    295.00

    302.00

    290.00

    293.60

    296.75

    14,579

    52.11

    10/10/12

    297.00

    299.00

    283.10

    284.75

    290.91

    6,142

    45.60

    11/10/12

    287.00

    303.95

    287.00

    301.55

    297.80

    15,244

    37.29

    12/10/12

    301.05

    307.85

    296.00

    300.35

    301.75

    7,890

    36.78

    15/10/12

    303.70

    314.20

    300.00

    307.35

    309.22

    19,687

    33.05

    16/10/12

    308.20

    310.00

    302.00

    302.05

    306.05

    3,371

    72.44

    17/10/12

    306.85

    338.45

    303.50

    326.25

    328.27

    84,693

    18.32

    18/10/12

    328.00

    364.00

    320.75

    357.50

    345.58

    79,462

    21.60

    19/10/12

    353.90

    372.00

    349.00

    359.65

    364.02

    45,824

    25.62

    22/10/12

    360.00

    367.00

    355.00

    357.05

    362.41

    11,064

    43.38

    23/10/12

    360.50

    364.75

    352.30

    359.50

    359.05

    8,301

    34.19

    25/10/12

    364.10

    378.65

    362.45

    369.25

    370.79

    21,224

    31.59

    26/10/12

    368.00

    379.10

    366.00

    372.80

    373.92

    17,033

    46.86

    29/10/12

    375.00

    376.85

    347.30

    349.30

    361.99

    9,115

    64.63

    30/10/12

    352.85

    394.80

    346.00

    376.65

    376.77

    1,41,084

    18.34

    31/10/12

    385.10

    391.45

    372.00

    384.30

    382.86

    4,08,352

    91.81

    1/11/12

    381.50

    409.90

    378.45

    386.55

    392.68

    3,17,898

    67.30

    2/11/12

    391.00

    428.45

    388.00

    420.05

    414.71

    2,07,371

    22.30

    5/11/12

    420.05

    434.90

    420.00

    427.60

    427.59

    79,167

    23.70

    6/11/12

    430.00

    433.20

    422.00

    425.50

    427.75

    25,834

    31.59

    Heritage Food is flying high at Rs 360+ surging over 130% in 100 days since Director’s wife picked up 50000 shares at @ Rs 155 !

    Heritage Food is flying high at Rs 360+ surging over 130% in 100 days since Director’s wife picked up 50000 shares at @ Rs 155 !

    Closed at Rs 357 today after a high of Rs 367

    The Company was set up by the ex Andhra Pradesh CM,Chandrababu Naidu and is headed  by his wife, N Bhuvaneshwari ~ They hold @ 46% of the Equity  ~ Above Director’s wife shares too are included in the Promoter Group

    Heritage Foods was quoted @ Rs 150 in the beginning of July 2012 ~ There was some relatively heavy volume on July 4 and July 11 ~ Company informed the BSE in a communication dated July 5,2012 but updated on BSE website on July 12,2012  that Nara Brahmani,wife of Executive Director Nara Lokesh had purchased 50000 shares in the Open Market through Zen Securities at Rs 77.50 lakhs or Rs 155 per share on July 4,2012  ~ She held just 500 shares prior to this !

    http://www.bseindia.com/xml-data/corpfiling/AttachHis/Heritage_Foods_(India)_Ltd_200712_SAST.pdf

    Check out the first Fortnight July 2012 volumes on BSE for Heritage ~ normal trading was in a few thousands except for the two days stated above

    Date Open Price High Price Low Price Close Price WAP No.of Shares No. of Trades Total Turnover (Rs.)

    02-Jul-12

    141.5

    149

    141.5

    146.2

    145.5776

    2701

    40

    393205

    03-Jul-12

    149

    152

    149

    152

    151.218

    1156

    14

    174808

    04-Jul-12

    159.7

    159.7

    148.05

    154.95

    154.6915

    60812

    163

    9407102

    05-Jul-12

    159.7

    174.95

    159.7

    171.9

    168.9391

    13345

    178

    2254492

    06-Jul-12

    177.8

    177.8

    163

    165.6

    170.2651

    10006

    92

    1703673

    09-Jul-12

    164.95

    164.95

    153.35

    156.35

    157.5627

    1994

    49

    314180

    10-Jul-12

    155

    158.3

    153

    156

    156.9005

    1035

    42

    162392

    11-Jul-12

    155

    169

    155

    158.25

    163.1434

    56483

    835

    9214826

    12-Jul-12

    158

    159

    154.1

    156

    156.5048

    1042

    22

    163078

    13-Jul-12

    156.05

    157

    153.3

    155.4

    156.1259

    3741

    37

    584067

    16-Jul-12

    157.2

    157.2

    155

    155

    156.7703

    209

    7

    32765

    Well Done Guys ! You’ve gained a cool 130% or over Rs 1,00,00,000 or Rs One Crore in gains INSIDE  just 100 days !

    Valuation wise the FY 12 EPS was @ Rs 8 with PAT at RS 9.19 crs on an Equity (FV Rs 10) of Rs 11.53 crs ~ Book Value is Rs 80 with Networth just above Rs 92 crs ~ Q 1 FY 13 has shown superlative strong results and the mood is upbeat with a strong surge in PAT expected this year ~ PAT for the the three months ending June 30,2012 was Rs 8.44 crs ~ it thus earned in three months nearly as much as it had in the whole of last year !  However with Closing Price at Rs 357 today ,and considering FY 12 Earnings and Assets,relative valuation give a P/E of 45 and P/BV of 4.5 ~ That’s High ! and clearly a record FY 13 Year is being reflected in the surging share price  ~ EPS should comfortably double past Rs 16 and even move above Rs 20 ~ that adjusts the Forward P/E to below 20….The current Market Cap is just Rs 411 crs or @ US $ 75 Million for a Company whose Sales should cross Rs 1500 crs this year through a strong marketing and distribution Chain that cannot be replicated overnight ~ and what’s US $ 75 million for a FMCG MNC to buy out 100% of a leading Indian Listed Dairy Company that has a major market share in South India through over 1000 Franchisee and Own Retail Outlets and Parlors     

    So what’s happening ! ~ Heritage Foods has been wooed by several FMCG Multinationals in the past ~ like the likes of HUL & Nestle ! ~ It’s Dairy Division is the Main Driver while the Retail Division is recovering from the nascent loss read more

    Scroll to Top