Whispers January 2018

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By IE&M Research

Ramco Systems

  • BSE Code: 532370
  • CMP: `560

Arenowned small cap veteran investor is highly bullish on Ramco systems. He opines, “Ramco systems seems to be in the right place at the right time. It has an impressive product portfolio, an extremely capable execution team as evidenced by the 1000+ customers in 40 countries. The company has superb operational leverage potential, as the product once created can be rolled out worldwide and across industries with minimal incremental costs. Ramco’s sales team has proven its worth by the aggressive acquisition of marquee customers across industries and geographies. A quick study of the Kano model of a product’s life cycle would suggest Ramco as a great takeover candidate for any IT company with deep and entrenched client relationships across industry verticals and geographies (Think Cognizant, TCS etc. that have an extremely strong and powerful sales force that can cross sell Ramco’s suite of products and reach clients before competition). Irrespective of whether Ramco goes it alone, or get acquired, given their futuristic product portfolio and an extremely competent management team, there is a very high probability that Ramco will be worth significantly higher than the current market price in the coming years”. The Company silently has nearly doubled from its 52 week low and with an expected good quarter ahead, the stock is expected to remain in action.

Rajratan Global Wires

  • BSE Code: 517522
  • CMP: `723

Lots of action is expected to happen in Rajratan global. The company has got approvals from Sumitomo and Bridgestone hence their sales have shot up in Thailand markets. The current Thailand market is of 5000-5500 Mt size and company’s market share, which was just 20% few quarters back has more than doubled. It has further plans to increase its market share in that market. A high carbon wire is their major raw material. Currently, 85% sales are contributed to Tyre Sector and rest is attributed to value added products. For tyre companies Rajratan’s products constitute around 3% of total expenses, hence they always prefer to go with superior quality products since it is a very important component of tyre. Overall industry size is 1.2 MT and Rajratan Global wires constitute only 5% of overall industry, hence there is a big scope of improvement. Kisewires from Korea and Bekert from Belgium are the Global giants in this business. Entry barriers in this business are big for approval. Indian tyre companies take 4 years and Japanese companies take 5 years for approval. The company is expected to report robust numbers going forward.

Agro Tech Foods

  • BSE Code: 500215
  • CMP: `713

The market is ripe with talks of good accumulation in ATFL from informed investors. The company is building a platform to launch a vast portfolio of food products, both proprietary and from ConAgra’s portfolio, which could grow revenue and margin substantially going forward. The company has spent around `150 crore as capex over the past 5-6 years to set up new plants for the food business, where the company is firmly on track to achieve the target of increasing the share of food business in sales to 50% in coming years. As major investment phase is over, the company’s growth is expected to gather pace in the near term with at least two new product launches every year. The company is currently focused on growing distribution and launching additional products with negligible advertising spends, strategically invested in building distribution and back-end capabilities before embarking on aggressive product launches and advertising campaigns. Besides focusing on Western snacks, the company made selective entry into Indian snacks category with Sundrop Peanuts and is now planning to expand this product range so as to take advantage of the rapidly growing Snacks market in India. While the company is expecting to maintain flattish growth in the edible oil segment, its food business is expected to witness increased traction and drive its future growth. No wonder the stock has started seeing healthy movements of late. The management believes culture is indispensable for the long – term effectiveness of the organization and has a strongly knit culture with clearly defined elements to guide the ‘Way We Live’, the ‘Way We Work’ and the ‘Way We Lead’.

 

About the author: IE&M Team

Indian Economy & Market is an Indian media and information platform producing data-backed news and analysis on all the vital elements at the intersection of the economy, stock markets, mutual fund, insurance, commodities, currency, technology, startups and business.

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