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January 17, 2014

3

AVT Natural Products – Multibagger Analysis

by Futurecaps Advisor

Let us analyze the Multibagger possibility of AVT Natural Products according to our typical Warren Buffett Way!

The quick note is: "Not a Multibagger!"

About AVT Natural Products

AVT Natural Products Ltd (AVT NPL) is a venture promoted by AV Thomas Group, as a strategic diversification from the traditional plantation business. Operating in line with its corporate signature, we are specialized in the extraction of colors and flavors from natural source.

Website: http://www.avtnatural.com/

Analysis: http://www.screener.in/company/?q=519105

Warren Buffett Checklist

History of Consistently Increasing Sales, Earnings & Cash Flow image_thumb image
Durable Competitive Advantage  Company have competitive edge of:

  • Marigold Oleoresins
  • Spice Oleoresins and Essential Oils
  • Value Added Teas
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Future Growth Drivers Company have good export base for Vanilla pods & the demand is increasing in global market. image
Conservative Debt (long term debt < 3 Net Profit) Debt comes around 60 Crores & 3 Year Net Profit comes around 150 Crores.  Yes – this company can sail smooth on tough times. image
Return on Equity must be Above Average Impressive ROE
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Low CAPEX required to maintain current operations Company requires moderate CAPEX. image
Management is holding / buying the stock Promoters are increasing their holdings in past years.  Good sign of confidence from them.

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Price is Under Valued (< intrinsic value) Intrinsic Value comes around 10 & the Current Market Price of stock is around 20.  This parameter fails.  (Although company have high ROE, the EPS growth is not too impressive & thus reflected here) image
Stock Price is consolidating Yes

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Additional Futurecaps Checklist

PE, PB Ratio PE: 6; Book Value is 11 & CMP quoting above book value. image
Cash Flow Positive Negative Cash flows exists. (Please ensure financing activities) image
Paying Dividends, Tax Yes. Impressive Dividends. image
EPS Growth Rate 10%. Not Impressive image
Expected Gain in 10 Years 3X image
Power of Brand Exists image
Corporate Governance, Reputation of Leaders http://www.avtbiotech.com/pdf/1.pdf image

Declaration

Considering all the parameters above, On the grounds of value investing, We cannot strongly recommend it as a Multibagger, especially in current market range.

Disclaimer

Futurecaps recommends 20 to 25 multibaggers per year, we recommend a 25% to 50% allocation of your savings in equity.  The stocks recommended here are gone through Analysts of several years experience in stock market.  Although they were successful in predicting future multibaggers, the overall stock market is a risky game.  So we recommend the reader to put his/her own thoughts & invest wisely.

Read more from Multibaggers
3 Comments Post a comment
  1. m.eyalselvam
    Aug 7 2014

    good.

    Reply
  2. vikas sanghvi
    Sep 2 2014

    Would required your knowledge for two stock
    1) l&t finance holding
    2) tourism finance corporation of india

    Reply

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