Company: Karuturi Global Ltd.
Industry: Floriculture and Agriculture
CMP and PE Ratio: Rs. 8.50 with a PE ratio of 31.94
Product Mix for Karuturi Global: (1)Horticulture – 87.95% (2) Other Sales – 6.58% (3) Software development charges and other service – 5.45%Financial Analysis:
- Income Statement - On a standalone basis the topline growth has not been very robust so far for the company. However, the operating margin, net profit margin and gross profit margins have improved substantially over the years. On a consolidated basis the company has shown excellent growth and the trend is expected to be mantained in the near future.
- Balance Sheet – The company has gone for significant equity dilution and has also leveraged itself substantially in the past few years. But this should not be a matter of great concern if the company is successful in executing its big plans especially in Ethopia.
- Cash Flow – Karuturi has been able to generate positive operating cash flow on a consolidated basis and this is positive for a company which is already significantly leveraged.
Business Analysis:
- As of 31st March 2008, Karuturi Global has 298 hectares under cultivation (excluding 40 hectares under contract farming in India). The company’s 100 hecatres of land in Ethopia is expected to be fully operational this fiscal year itself. Karuturi has acuuired additional 385 hectares of land in Ethopia, of which 25 hectares will be operational in FY 09 and the remaining in FY 2010-11. This effectively will lead to doubling of rose revenue for the company.
- The bigger business prospect for the company will be its agro based cultivation initiative in Ethopia. By FY 2011-12 the company expects its agri business to generate more revenue then the rose business. I personally believe that its a great business initiative if the company can stick to its plan and achieve it.
- Karuturi also has plans to foray into bottling of baby corn, jalapenos & green ball peppers, for which a huge global demand exists.
- Karuturi Global has also taken the initiative of opening floriculture retail stores in India. Its first store is already operational in Bangalore and it plans to open 50 such stores in the next few years.
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