Before I start actively trading I was always a value investor limiting myself to less than 5 trades whole year. I bought Advanced Enzyme Technologies in the time of its IPO based on the following facts.
- I came to knew about this company when a professor of my college shared his research with this company. He was an avid liker of Beni Prasad Rauka and was also a bit disappointed as there was a shift in roles to a young guy named Prabal Bordiya. I came to knew that this company made its fortune based on its research on Papaya
- Today papaya can be found all year long with the peak season being early summer and fall.
- Although it is listed late, it was steady growth company and made it to the largest producer of enzymes in central Asia slowly starting from 1957!
- It ranks among the top 15 global companies in terms of enzyme sales and has the second highest market share domestically
Well it will be a long positive fact. Maybe these same facts chime out other investor and made it a staggering 116.91 times over subscription!
I bought a good number of shares at the time of IPO. I was thinking to invest more but I didn’t managed time to find their quarterly results data for previous few years to do a DCF analysis that time and Ithought stock valuation was overvalued as it was trading at 7–8 times higher than its book value back then.
But, I saw a comment of Junior Rathi @ CNVC.
“Currently, exports contribute about 66 percent of its revenues and the company is optimistic about a larger double-digit growth in the next 10 years. The enzymes market in India is small and the company wants to expand in Americas, West Asia and far East” – CL Rathi, Managing Director of Advanced Enzyme Technologies.
Also their debt got significantly reduced from 101 Cr to 40 Cr and right now it is around 50 Cr debt which is amazing. I bought 700 more shares @ 1320 at the time of the seeing the news immediately.
Initially I was worried on it as the GST is impacting the import price and making import cost friendly whereas it has zero effect on export companies.
As I have known it has 6 subsidiaries of which, 2 are wholly owned subsidiaries and 3 are step down subsidiaries.
AE USA based out of Chino, California, caters to the American markets.
AE India caters to the European and Asian markets. But AE USA has significantly more revenue than Indian market as well as AE USA has a huge potential to grow as it has untapped many sectors very well where Novozymes failed!
- The company has not published any more important even in their milestone section.
- And it is right now trading really higher (around 16–17 times) than its book value.
- The profit growth for last three years are too staggering. (Mar-14 – 20.09 Cr; Mar-15 – 50.10 Cr; Mar-16 – 78.44 Cr)
There is a good chance of not doing better than expected results soon which may cause fall in price. Anyways I am holding them. But I will not advise to buy fundamentally.
But, at this current moment though you may certainly buy it for short term as it is having a steep downtrend; so technical analysis will be the deciding factor!