Diwali Wishes-Temptations

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Dear Readers,

Wish you all and family a happy, prosperous and sweet Diwali.

I have registered a domain for this blog and readers can access it by typing stockinfos.in

I wish to recommend a scrip to readers as well to my clients as my present for this Diwali. The scrip is sweet indeed as the company involved in the field of food processing including fruits and Vegetable. One more imperative reason to suggest this stock as it comes under one of my much preferred sectors, Agriculture! the only sector, which have'nt a way back.

India with its population of about 1.10bn people, growing @ 1.6% pa is a colossal and growing market for food products as well as other processed eatables. Spending for food is the single largest element of personal consumption expenses. The increasing numbers of modern retail stores are itself the sign of high growth rate of Indian retail revolution. The consumer lifestyles are changing drastically with an increasing need of eased and hygienic edibles. All of the above factors will help to grow the underlying demand for the convenient food whether it is fresh or frozen. Above all, the role of food processing and preservation becomes significant since agricultural production is targeted to double in the next 10 years by Govt of India.

BSE Code - 519228
Sector - Agriculture(Food Processing)
CMP (15/10/2009) - 36.10
EPS - 23.61
PE - 1.55
BV - 98.79
FV - 10
52 Wk L/H - 18.85/264.75
Buy Range - 30-40

Ever High post 2000 - 350(Jun 2008)
Market Cap - 92.14 Cr
Chairman/MD - Vinit Kumar
Promoter(s)’s holdings - 21.13%

Temptation Foods Limited (TFL) established in 1991, affianced in the frozen processed fruits and vegetables belongs to Agricultural Sector. The company uses the most modern IQF (individual quickly freezing) technology for preserving the products. TFL has established it’s modern processing facility in the midst of fruit and vegetable farming zone at Jejuri, Pune. The plant involved in deep freezing of mangoes, pineapples, papayas, melons, grapes, strawberries etc. TFL also processes a variety of vegetables like green beans, green peas, cauliflower, okra, corn, carrots, chillies(red and green), ginger-garlic cubes, samosas, parathas, paneer products and a variety of other ready to serve eatables. The company has an Installed capacity 4000 MT for IQF Frozen Fruits & Vegetables.

TFL processes a variety of vegetables and fruits for the Indian markets and also exports to several of the biggest brands in USA, UK, Europe and the Middle East. The company has acquired the Everfresh brand of frozen Fruits and Vegetables from the K. K. Birla group in November 2007, one of the biggest domestic brands in the segment, Everfresh has reached in the top line of Rs 200 million in 2007. Ever Fresh offers quality IQF products over 50 types of vegetables and fruits such as French beans, carrots, cauliflower, coconut, sweet corn, tapioca, mixed vegetables, okra, spinach, karela, green peas, drumstick, brinjal, onions, Green Peas, American Sweet Corn, Baby Corn, Broccoli, Palak, Sarson ka Saag, Shredded Coconut under Delika brand name and different varieties of fruits like Alphonso Mango etc..

The company also processess, fig and orange, strawberry, chunky orange marmalade, plum, mixed fruit, and peach; sauces, such as pizza, Italian pasta, Szechwan, and Mexican salsa sauces; and dressings, including eggless mayonnaise, garlic mayonnaise, whole grain mustard, Italian salad dressing, French dressing, fresh mayonnaise, and sandwich spreads under Karen Anand brand name.

The company has recently introduced combination products like Gajar Mattar, Mattar Paneer, Aloo Mattar etc. Ever Fresh farm products are procured from Haryana, Punjab and the Terai region, the heart of the Northern Agri-belt of Western India. The farm produce is plucked and processed with the IQF technology within 24 hours. The products are then packed in unique food grade packaging at -20 degree C. The company claims that 'Ever Fresh' range of products are processed and packaged without any chemicals and preservatives and meets the national and international quality standards including FPO.

TFL today represent one of the biggest organized publicly listed companies in this sector. The Karen Anand range of gourmet products has also become a part of TFL’s list. The company produces the Karen Anand range of products at their plant in Jejuri near Pune. TFL processes Fruit and Vegetable produce at 6 plants: Sonepat, Karnal, Rudrapur, Kashipur(2 plants) in North India and Jejuri in West India. The plants have a combined annual capacity to process, pack and Individually Quick Freeze (IQF) over 60,000 tonnes of Vegetables and Fruits. TFL’s installed capacity of above 30,000 Tonnes is the largest company with such facilities in the country. Similarly, in-plant cold stores have a combined capacity of over 5,400 MTs again the largest such cold storage in India.

The company procures fresh fruits and vegetables mostly from the Terai region in North India and the Agriculture Produce Market Committee (APMC) of Mumbai and Pune. The plants are strategically located in the heart of the agricultural zones. TFL is the first Indian frozen food Company to get ISO 9001 certification. The Company also has International Quality Accreditations such as the HACCP and RINA ISO 9001:2000 approvals. TFL exports 90% of their products, however the company has recently started supplying goods domestically under the Everfresh brand. Nearly all large domestic retail chains are TFL clients. This segment includes retail chains like Metro, Shoprite, Big Apple, Spencers, Reliance Fresh, Spinach and Food Bazaar.

My View on the scrip

I expect substantial multibagger returns from this scrip with a 2-3 year term. The current valuation and growth prospects are really attractive. The food processing sector becomes significant as agricultural production is targeted to double in the next 10 years by the Govt of India. It is expected that the fast growing retail chain spectrum is an added advantage for the company for bulk orders from the retail giants. The increasing population and changing food habits even in urban areas will surely beneficial for the company. The recovery symptoms from the recession turmoil must increase the consumption by foreign/domestic clients. TFL comes under a distinctive class in this sector as well as keeping an enhanced reputation in its clients. A bit of speculative history is there with the scrip but still I expect Its a safe bet for long term.

Readers are requested to place their comments on the scrip.

I am not responsible for your investment decisions, please do your own research before make any investment decisions.

Shabu T - sthachat@gmail.com