MULTIBAGGER STOCK RECOMMENDATION - SIMRAN FARMS

Simran Farms    BSE: 519566    CMP : 32.50

Simran Farms was incorporated on October 26, 1984 and started its production in February, 25 1990 as a private limited company; and was converted into a public limited company with effect from September 2, 1993. The Certificate from Registrar of Companies giving effect of conversion to Public Limited Company was received on October 15, 1993 with effect from September 2, 1993.

The company is an existing profit making dividend paying company with installed capacity of 12,000 grower birds and 22,500 layer birds for the purposes of producing hatching eggs. Looking at the growth potential, the company is embarking upon expanding programme for increasing the capacity of grower birds to 36,000 and layer birds to 72,000 per annum for the purpose of expanding the capacity from 3.37 million poultry hatching eggs to 14.17 million poultry hatching eggs p.a. The company was in the process of identifying suitable land with necessary infrastructure for putting up the project, due to which the company could not go ahead with the project however after identifying the land the company immediately implemented the project and started the commercial production from February 1990. Further, the company has not faced any labour problems/litigation defaults and there was no closure.

The sales of Simran Farms have risen from 11.56 crores in financial  year 2006 to Rs.135.94 crores in FY10 and 166.02 crores in FY11. in FY11 the net profit of Simran Farms was 3.99 crores. This was as against 3.41 crores net profit in FY10 and 2.21 crores net profit in FY09. The current EPS is Rs.10.52 and the PE ratio is 3. The company is almost debt free, with a marginal debt of Rs.11.42 lakhs and a net worth of over Rs.17 crores. The company is run by Mr. Harender Singh Bhatia, a veteran in the poultry industry with 32 years of experience in all the aspects of poultry industry including poultry keeping, feed management, farm
management Going forward,  expect Simran farms to increase its sales substantially and improve its margins at the same time. It is a good buy at the current market price of Rs.32.50 with a target price of
Rs.65 in 1 year.