Tuesday, January 5, 2010

Stock Idea: Kohinoor Food

This maker of basmati rice is sure to end current fiscal in the black. If we all are complaining about the rising costs of food, companies which get the food onto the super markets and shops are the ones who stand to gain the most. And that is what we see reflected in the financial performance of Kohinoor.
Reduction of expenses and making no provision for deferred tax has helped the company show a much better profit margin. For the time in Q2FY10, it was crossed the 2% mark and was at 3.49%.
Monsoon was bad in the first half and that has surely affected the kharif crop. A shortage of around 10-12% is estimated for non-basmati rice but basmati crop has been very good and this is expected to be over 50% higher than last year. The company exports 80% of its basmati rice and there the realisations have been higher. To curb prices of non-basmati, the Govt is importing rice and this will prevent any spike in the prices. So for Kohinoor, the earner will be exports of basmati rice. If the Govt bans exports to curb prices, then the going will get tough for the company, which is what affected the performance last fiscal.
Undoubtedly, the company would end FY10 on a much higher note. And that is what we are seeing in the stock price, which has been soaring high for some time now.
Source: Internet (by S P Tulsian)

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