FRESHTROP FRUITS LTD. - BUY FOR A HEALTHY TOMORROW !!!

 

Happy & Prosperous Diwali to all the investors....

In the pursuit of safe investment & creation of wealth, I am taking you through an interesting stock today.
FRESHTROP FRUITS LTD. This is a new recommendation and not the answer to Quiz-1

This Ahmedabad based company is into business of selling 
1) Packaged fresh fruits and 
2) Processed fruit products such as Pulp & Extracts.

The company has ultra modern cold storages, processing and packing facilities in Nashik, Sangli & Satara regions of Maharashtra in the vicinity of fruit producers.

Fresh fruit segment involves mostly exporting of Grapes, Pomegranates & Mangoes. This segment contributes around 80% of the top line and more than 100% of profit. The season of these fruits start from January and ends in June every year. That is why around 85% of their sales is in Q1 and Q4 of every year.

Processed fruit product segment involves processing of fruit pulps primarily mango pulp, pomegranate pulp, tomato puree, guava pulp etc. Most of the sales in Q2 and Q3 is through this segment. This segment contributes the rest of the revenues for the company thereby making up the shortfall of fresh fruits sale in Q2 & Q3.

Now, one of the major reasons of slow growth of their business is not branding their products. 

Although, On the fresh fruit side, 70% of sales is directly to the European super stores like ASDA, Tesco, Marks & Spencer, Albert Hynes, DelHaize, Carrefour, Migros and several others. and 30% is through some agents. The fruits are sourced from Maharashtra, Karnataka and Telangana regions.

On the fruit processing side, the company is trying to expand this business by adding second line of fruit processing and modifying the plant for processing more fruits. As per recent AGM communication,this line is now ready and can now process 2 fruits together. The processed fruit products are supplied to companies like ITC, Pepsi, Coca Cola etc and are not marketed directly.

As per Q1FY15 results, the company recorded its highest ever revenue and profit in a quarter from this segment. It will be important to monitor the situation during Q2 and Q3 and see whether the food processing segment has really turned around with the addition of capacity. On account of this, the management gave estimates of 140-150 cr revenues for this year and about 190-200 cr for next year which is 30% growth. 

Seems like, this is a bit aggressive target but if the following factors turn out in favour of the company, it can surely hit the target and be a 'Multibagger stock'.

• Addition of capacity in fruit processing segment. 
• Recent removal of fruits n vegetable from APMC by Modi govt.
• Fast growth of Agro-Retail concept in India
• Renewed policy for promotion of exports of Fruits & Vegetables.
• Branding of products by the company
• Any decision on adding of fruit juices in carbonated cold drinks like Coca Cola, Pepsi, etc..

Financials:

• Current market price @ Rs.59. Trading only on BSE.
• Substantial reduction of Debts since last two years (from FY13)
• Over 70% revenue from exports.
• Compounded sales growth of over 25% since last 3yrs.
• Company has consistent profit growth of 22% over 5 yrs.
• Promoter stake has increased to over 50%.

Company Management:

Company has experienced management. Chairman & MD Mr. Ashok Motiani is an IITB grad having good understanding of the business. 

 

Company has all the Quality Standard Certifications required for exporting & selling products in various countries & continents.

FRESHTROP FRUITS LTD. is the only company listed on BSE/NSE that manufactures processed fruit products.

The company is operating in the sector with a huge un-tapped potential.

Investors with a little higher risk appetite can invest in this stock for healthy returns.

For further details pls. refer company website: http://www.freshtrop.in/