Company and Industry: Camson Bio Technologies Ltd is in the Floriculture industry.
CMP and PE Ratio: Rs. 28.75 with a PE ratio of 3.62
Industry and Stock Outlook : Positive for long term
Financial Analysis:
* Camson Bio Tech has shown robust revenue growth in the last five years. During the same period the operating margin, gross margin and net profit margin for the company has also increased significantly. For the first nine months of FY 09, the company has clocked a turnover of Rs. 42 crores with a bottomline of 8.16 Crores. Thus, we can expect a lower PE in the future as the current PE is based on FY 08 EPS. * The company has a decent balance sheet. The equity share capital has been expanding over years, which is natural for any growing company. In my opinion the management has bought new funds to good use as indicated by the revenue growth. The debt equity ratio of the company is also very low at 0.07. This gives room for the company to leverage itself for more funds in the future.
* The company has also been generating positive operating cash flow for the last two years. This is another healthy sign. Positive operating cash flow allows the company to fund its working capital and expansion through internal accurals. The last two years have also seen good capital expenditure incurred by the company. This should translate into higher revenue growth for the company in the future.
* The book value per share for Camson, as on 31st March 2008 was Rs. 26.07. Thus, Camson is just trading marginally above its book value. This coupled with good financial growth and a low PE makes Camson an attractive bet for long term.
Business Analysis and Growth Drivers:
* Camson Bio Technologies mainly derives its revenue from sale of seeds and agricultural products. In my opinion both of these are areas of high growth in the long term. Thus, I am personally very bulish on the business of the company.
* Camson has launched, fresh vegetables and fruits under its brand “Camson Zero Residue Vegetables and Fruits”. Camson “Zero Residue” products are safe food without any pesticide residue in them. In my opinion this segment will be a major growth driver for the company in the future. With increased health awareness, these products should be successful in Indian as well as International markets.
* Camson is also in the production of huge variety of hybrid seeds. These privide excellend and high quality end products and the market for hybrid seeds and products should expand in a big way in the near future, fuelling the company’s topline.
In all the government stresson agroculture will be the biggest growth driver for the company. Any political party coming to power has to lay stress on agriculture if India has to grow at over 10% in the long term. This will surely boost the business of companies like Camson Bio Technologies Ltd.
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