Company: Venky’s (India) Ltd.
Industry: Livestock – Hatcheries/Poultry
PE ratio of 2.8
Financial Analysis:
- Income Statement - Venky’s has shown steady revenue growth over a five year period. The operating, gross and net profit margins for the company had shown good improvement in FY 08 but the company has not been able to mantain this trent in the first nine months of the current fiscal.
- Cash Flow - The company has a good positive operating cash flow for the past five years and this is always a healthy sign. Moreover the company has made significant capital investments over the same period and this will translate into higher revenue growth for the company in the future.
- Balance Sheet - The company has a stable equity base and an steadily increasing reserves with a comfortable long term debt equity ratio of 0.8. Thus financing its operations or expansion is not a concern for the company at all.
Business Analysis:
- The product portfolio of the company mainly includes Chicks, refined oil, De Oiled Cake, Commercial Broilers, Processed Chicken and more recently besides this the company has also made foray into nutritional health products and pet food and health care products.
- The long term business prospects for the company do look bright and the product portfolio looks interesting. With increasing health awareness nutritional food products should do very well in India and if the company can expand and market itself in the right way it will be a major beneficiary.
This company does look like a interesting bet for long term investors. The current price and PE looks attractive but for anyone looking to investo for long term in this business it is advisable to wait for some more time as markets are bound to correct again in a big way anytime in the next 6-9 months.
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