Kohinoor Foods

We recommend a buy in the stock of Kohinoor Foods from a short-term perspective. It is apparent from the charts of the stock that it was on an intermediate-term downtrend from its September 2008 peak of Rs 130 till its July low of Rs 43. However, the stock reversed direction taking support from the significant support band between Rs 41 and Rs 43. Since then, the stock has been on a medium-term uptrend. While trending up, the stock surpassed 21 and 50-day moving average one after another and is trading well above these averages. On August 12, the stock jumped 10 per cent, accompanied with high volume. This bullish momentum helped the stock to conclusively break through its intermediate-term down trend line, by gaining another 10 per cent with an upward gap on August 13. The daily relative strength index is featuring in the bullish zone. Besides, the daily moving average convergence and divergence is on the verge of entering into the positive territory. We are bullish on the stock from a short-term horizon. We anticipate it to move up until it knocks our price target of Rs 68. Traders with a short-term perspective can buy the stock while maintaining a stop-loss at Rs 58.

via BL

IDBI Capital - Kohinoor Foods

IDBI Capital report on Kohinoor Foods:

FY07 revenues at Rs 5,892 million is up by 9% YoY on account of increase in branded sales. EBIDTA margin at 10% have increased by 138bps YoY leading to rise in PAT by 6% YoY to Rs 221 million.

FY07, PAT exceeding expectation

In FY07, KFL’s revenues increased by 9% YoY to Rs 5,892 million on account of 20% YoY increase in branded basmati rice revenues to Rs 3,292 million. Branded foods division contributed Rs 374 million to the topline, exhibiting an increase of 40% YoY. EBIDTA margins at 9.9% exceeded our expectation of 9.1% in FY07. This is on back of 24% YoY increase in branded sales that now contribute around 62% of total turnover. This lead to PAT rising by 6% YoY to Rs 221 million. Net profit margin stood at 3.7% inspite of increase in interest cost by 59% YoY and depreciation by 28% YoY.

Q4FY07, subdued quarter

For Q4FY07, revenue declined by 15% YoY to Rs 1,750 million on account of decline in commodity sales. However, operating profit increased by 17% YoY to Rs 172 million. EBIDTA margin at 9% increased by 237bps YoY on account of 20% increase in branded sales. PAT declined by 13% YoY to Rs 42 million. The decline was also lead by increase in depreciation cost by 31% YoY and interest cost by 32% YoY. Net profit margin increased by 8 bps YoY to 2.4%.

Valuation

KFL has reported excellent set of number exceeding our expectation. Going forward, we expect the company to post robust performance in FY08. The company's plans of ramping up rice milling capacity to 45 MTPH and RTE capacity to 100,000 pouches a day, are intact and expected to yield results by FY08. The current market price discounts FY08E EPS of Rs 18.7 by 3.3x. We reiterate ‘Buy’ with a target price of Rs 161.

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