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Narmada Gelatines, a micro-cap stock, saw its share price skyrocket on Bombay Stock Exchange after reporting outstanding results for the September 2012 quarter
Narmada Gelatines, a specialty chemical business company focusing on gelatines production, has posted outstanding results. Net sales for the quarter ended 30 September 2012 were Rs30.22 crore compared to Rs24.43 crore recorded for the corresponding period last year, up 23.69% year-on-year (y-o-y). The company’s net profit jumped a whopping 62.39% y-o-y, from Rs2.26 crore (Q2FY13) to Rs3.67 crore (Q2FY12). This was because of the boost in net sales. Narmada Gelatines is debt-free, so there was no question of interests affecting its bottomline.
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A closer look at Moneylife’s database revealed that operating profits jumped 65% y-o-y, which is nearly more than double its three-quarter y-o-y average growth rate of 29%. It managed to keep costs under control while boosting sales significantly. In fact, its average three-quarter sales growth rate is 18% while current quarter net sales grew over 23%. What is more surprising is that small gems like this have gone unnoticed by the analyst community. Its valuation is quoting with market capitalization 2.56 times operating profit while return on equity (RoE) is an impressive 20%.
Narmada Gelatines makes gelatine, ossein and di-calcium phosphate. It is based in Jabalpur (Madhya Pradesh) and has convenient access to its main, and essential, inputs of crushed bones, acid, lime and good quality water. Narmada Gelatines’s primary focus has been to develop long-term relationship with customers and provide international quality products that meet food safety standards. The industry dynamics favour the company. Gelatine is a derived demand of the pharmaceutical sector, where around 85% of the use goes to the sector alone. The balance is for edibles, industrials and such. The future of pharmaceutical holds good for India as patents begin to expire in the United States.
Narmada Gelatines stock price, at time of writing this piece, skyrocketed 9.13% to Rs139.25, on the Bombay Stock Exchange (BSE).
You can read more about Narmada Gelatines here.
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