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Wednesday, September 19, 2007

Venkys India

At the current market price of Rs. 180/- the stock trades at 6 times it FY08E earnings of 30 per share. Investor with a medium risk profile can consider position in this stock for a duration of 9 to 12 months with a target of Rs.250. The company has seen a substantial increase in Operating margins during the last two quarters and is expected to maintain the same margin levels in the current year.

Venky's India is engaged in poultry breeding, processed chicken, poultry medicines, producing eggs and hatching layer. Venky's has a strong domestic presence and the domestic sales is expected to grow 15% this year. The company has annual service contracts with multinational giants like Domino's, Pizza Hut, KFC and McDonald's. Venky's has strong export presence in middle east and Asia pacific region. The revenues from export is expected to grow at around 30% this year.

Fundamentals:

1) Diversified product portfolio.

2) Government policy initiatives for agricultural projects.

3) Strong client portfolio.

Risks:

1) Bird flu which has been off late seen frequently appearing in some of the Asian countries can dampen the revenue forecast.

2) Competition from countries like Thailand, Vietnam and china which operate on lower cost.

Posted by Srivatsan

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2 comments:

USHA said...

Hi Srivatsan,

I heard that paper and auto sector is doing/gonna do better performance...Do you suggest any of this sector .And i have another question,is it good time to invest in Neyveli stock now?

Thanks in advance.

September 20, 2007 at 2:43 PM
Srivatsan said...

TNPL is a good bet at this level with a target of Rs. 132/- within 6-8 months. You can also look at buying west coast paper mills on declines. Auto seems positive after the fed rate cut, but it is better to wait and enter after the coming quarter results.

Neyveli has had a good run up in the last two months. The stock is definitely a good bet in a longer time horizon. At this level it is better to wait for a 10-15% correction to enter into this script.

The market has had a good run up in one month, so invest on a cautious note and only enter fundamentally good stocks.

September 23, 2007 at 7:19 AM

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During fundamental analysis we look at a stock from three aspects

Company

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Industry

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Economy

Fundamental analysis might focus on economic data to assess the present and future growth of the economy.

To forecast future stock prices, fundamental analysis combines economic, industry, and company analysis to derive a stock's current fair value and forecast future value. If fair value is not equal to the current stock price, fundamental analysts believe that the stock is either over or under valued and the market price will ultimately gravitate towards fair value. Fundamentalists do not heed the advice of the random walkers and believe that markets are weak-form efficient.