Company’s Bio Division is professionally managed and after months of R&D and testing it has introduced these two products in the market. It has developed “Super Wonder” which will come in the market shortly & it is working on “Soil Reclaim” which is under development. SUPERLINA is only Nutrient Supplement which is complete food as per WHO. SUPERLINA is considered as the best food by many international organizations and institutions and considered as “THE BEST FOOD FOR THE FUTURE”. Spirulina is using as food supplement all over world as Daily basis in different form like Tablet, Capsule, Powder, Health drink, Noodles and other many food preparations. Company has received certificate from HACCP (Hazard Analysis & Critical Control Points) & FSSAI (Food Safety and Standards Authority of India) License after successful inspection of manufacturing facilities of Spirulina and Compliance with the requirement of the FSSAI. This will facilitate the Company to expand market of Spirulina and its product mix in domestic as well as international market. Spirulina is a high margin product. DABUR, PATANJALI, HIMALAYA, EID PARRY and many other companies are selling 100-120 tablets at Rs.400 to Rs.1000. This high margin product is exempt from GST. The Company is planning to increase production capacity of SUPERLINA up to 1 MT per month.
Company Background:Incorporated in 1987, Super Crop Safe Ltd manufactures and sells agro chemicals & bio products in India & internationally.Under agro chemicals, Company manufactures a broad spectrum of technical grade pesticides and formulations of insecticides, fungicides & weedicides for crop protections. At present company holds valid CIB registrations for 10 Technical grade pesticides and supplying more than 103 products in the market under various brand names.The Technical Grade Pesticides manufacturing unit & formulation unit are located at Himatpura in Bilodra about 65 kms away from Ahmedabad on 20,000 sq. yd. land. Company has established distribution network for marketing its products in the states of Gujarat, Rajasthan, Panjab, Hariyana, Madhya Pradesh, Maharastra and Chhattisgarh.
New Product category:Company has entered in to new product category. Under which Company has introduced two new products in the market:
1. SUPERLINA (Spirulina) for Human
2. SUPER GOLD (Mycorrhizal Bio Fertilizer) for Crop.
SUPER GOLD is licensed product for which production from root level to formulation is developed in Bio Division, which is done by only few Companies in India. It increases roots in crops and increases reach of roots to absorb more fertilizers and water which remains untouched otherwise. Use of this product will reduce the use of chemical fertilizers and water that will result in low cost farming to Indian farmers. Mycorrhiza (VAM) increases 10 – 100 fold roots potential to absorb the nutrient from rhizosphere and imparts natural defense against various pathogens. It reduces the use of chemical fertilizer up to 50% and enhances the yield up to 40% of plants.Recently GST council has decided to reduce GST rates from 12% to 5% on fertilizer which is beneficiary step for farmers as well as manufacturers. Company has built up 2000 MT manufacturing capacity for SUPER GOLD. During the Financial Year 2016-17 Company had entered into Manufactured by Marketed by arrangement with “The Maharashtra Agro Industries Development Corporation Ltd” (MAIDC) for Supply of “Mycorrhizal Bio Fertilizer”. During the year 2017-18 Company has started catering to MAIDC and expecting good sales orders from the esteemed organization, which will increase PAT margins. SUPER WONDER is a biological insecticide based on botanical extract produced by anotechnology & formulated as balanced poly-botanicals WS (Water Soluble Concentrate) with nano concentration of Cofactors for plant defines enzymes.This product protects from sucking pests Like, Aphids, Jassids, White Fly, Thrips, Mites etc and fungal pathogens (Mildews, Wilt, Damping off, Leaf spot etc). It has ovicidal effects. Minor insect is easily killed by different natural plant extracts. Besides Poly-botanicals, the extract contains various natural elements responsible for the growth of the plants. It can Boost crops immunity and over all biomass hence yield. This product will come in to the market very shortly. SOIL RECLAIM: Seven million hectare of Indian soil is either alkaline or sodic hence non-productive for crop. It is a great challenge for scientist to reclaim these soils. Super Crop Safe is at the verge of development of a combination of natural alkaline/sodic microbes with green chemicals having great potential to reclaim it slowly. This will prove again a game changer product for the company.
Performance review:During FY17, its net profit skyrocketed 139.16% to Rs.2.88crore from Rs.1.20crore in FY16 on higher sales of Rs.75.26crore fetching an EPS of Rs.4.12. On PAT front, Company has reported 95% CAGR growth in last 3 years & 32% CAGR growth in last 5 years. On 28th July 2017, Company has reported mind-blowing numbers for Q1FY18. Net sales rose 18.96% to Rs.17.90crore as against Rs.15.05crore in Q1FY17 while net profit soared 195.47% to Rs.0.80crore against Rs.0.27crore in Q1FY17 fetching an EPS of Rs.1.06. Equity capital, reserve & shareholding: The Company has an equity base of Rs.7.55crore while company has reserve of around Rs.13.32crore. Its share book value stood at Rs.19.03 & stock is trading at 7.8 price to book value. The promoter is holding 36.27% stake in company while public hold 63.73% stake in the company. One must note that it is almost debt free company.
Dividend: It is regularly dividend paying company. Company has declares 7% dividend for FY17. Recent Development:Gujarat and Rajasthan which arekey markets for Super Crop are facing heavy rains since last week though state governments were quick enough to respond to the situation. This has disrupted supply chains and most importantly agriculture activities have taken hit. But we believe these are only near term headwinds as most of farmers are covered under state and central governments’ various insurance schemes. Gujarat government may be a little bit more generous of releasing funds to farmers considering elections later in this year. We believe this is beneficiary for Agro Chemicals & Fertilizer sectors.
Future Outlook: Company is enjoying success of SUPER GOLD which is clearly seen in its June quarter’s number. This growth would be further propelled with the introduction of 1-2 new products every year, which would have distinctive competitive advantage over the target molecules.In addition, the Company will strengthen and expand its reach into new underdeveloped markets and crop segments which will further improve prospects going forward. Institutional tie-ups with the Corporate, for supply of agrochemicals have also started yielding fruits and will contribute to growth of the Company.
Stock is available at Price Earnings Ratio of 31 on TTM EPS. At CMP its Price Earning to Growth (PEG) ratio is just 0.32 on based of last three year’s performance which claims that, this stock is highly undervalued against its peers. Many companies in this sector have given multifold returns in last one decade. i.e DHANUKA AGRITECH was traded at Rs.26 in 2006, The stock has made all-time high of Rs.930 in May-2017. In FY06, Company had reported net sales of Rs.54.42crore with profit of Rs.2.95crore & this company has posted net sales of Rs.876crore with profit of Rs.120crore for FY17. Today, DHANUKA is become Rs.3850crore Company. Not only DHANUKAbut UPL, RALLIS, EXCEL CROP, P I Industries, BHARAT RASAYAN have also given multi-fold returns in last 5-10 years.
Based on above financial & development we strongly believed that SUPER CROP SAFE can give multi-fold returns in coming days. We had recommended this stockin past between Rs.115-135. Now, it is trading around Rs.150. Investors can buy this stock with stop loss of Rs.120 for multi-bagger returns.