Tuesday, June 15, 2010

Simran Farms - How the company turned around

I have precise explanation for improvement of performance. Circa ten years 1996-2007 company's turnover stayed same, 7-10 crore range as it was into 'Parent Poultry' breeding. 2007 was the turning point as it entered commercial broiler breeding, when it had 80 farms, by 2009 it had 200 farms, by middle/end of next year 350+ farms. That is the reason the company turned around.

Financials are not fabricated. I cant answer for punters, operators in the script.

To me it feels very low probability of a permanent loss of capital but there can be likely massive gains in short term (2 years perspective). Heads we win, tails we dont lose much - Dhandho approach.

RJ made 5 bags in two years in United Breweries, knowing it has dubitable corporate governance.

Its about processes, strategies, timing, insight too besides Moat, Roe, Management bandwidth, High margins, Brands. I presume you dont intend to pass this stock to your grandchildren.

Look at Srinivasa Hatcheries, compare these two peers on sales to market cap basis. They are pretty much converging into same business. Think about possibilities.

I can also confirm for you that company has internal commercial feed production for poultry that accounts for 90% of input costs on lines of Venky`s.

Monday, June 14, 2010

Simran Farms - Update after management discussion

I have been told to expect a dividend this year.

Invest carefully as it is a cyclical and commodity stock.

I expect this to be a 50-100 crore market cap company in 5 years, which is upto 7 times upside.

Happy Investing

Friday, June 11, 2010

Simran Farms - Counting on Chicken & Ruling the Roost

Hi All, 

I want to bring to your notice a poultry stock - Simran Farms. Venky's and Srinavasa Hatcheries have done awesome. 

Open issues 

- I have had no contact with management 
- Dont know whats the moat 

I do know that chicken consumption doubles every 5 years in India and will again by 2015. On market cap to sales, company is undervalued if operating efficiency kick in. 
Looking at last five years figures, you cant tell two occurances of bird flu smacked the company. Stellar growth if its all for real. 

This group has many other unlisted companies. 

I am betting that it can be a 50-100 Crore market cap company in 2-3 year which is upto 7 times upside.