Freshtrop Fruits Ltd

Freshtrop Fruits Ltd Other Agricultural Products

Market Cap.: ₹ 110.20 Cr.

Current Price: ₹ 90.70

Book Value: ₹ 42.84

Stock P/E: 12.61

Dividend Yield: 1.10%

Face Value: ₹ 10.00

Company has good consistent profit growth of 231.86% over 5 years-

Company has been maintaining a healthy dividend payout of 17.05%

Cons:- Company might be capitalizing the interest cost

Sales increasing at consistent pace

Net Profit 8.74

margin seems less.. but packaged fruits has huge potential

but not huge margin what about local players and the shops itself doing the same like Godrej or Big basket etc also have packaged fruits from their own vendors branded 

irregular growth Climate dependent

Return on equity is not so  good 15% not great 

Freshtrop Fruits Limited is engaged in the business of exporting fresh fruits and vegetables to supermarket chains in various parts of Europe, Russia and Far-east, as well as in domestic market. The Company is engaged in the processing of fruits and vegetables. The Company’s segments include Fresh Fruits and Food Processing. The Company is involved in producing fruit pulp and concentrate for both the domestic and international customers. The Company offers pomegranate arils. The Company offers grapes, such as Thompson seedless, flame seedless and sharad seedless. It offers processed foods, such as pomegranate, mango pulp, alphonso mango pulp, kesar mango pulp, totapuri mango pulp, guava pulp, tomato paste, amla (gooseberry) pulp, and red papaya concentrate, puree and pulp. It has approximately three pack houses and cold storage facilities located in the state of Maharashtra. The Company has a juice processing plant at Nasik, Maharashtra, approximately 180 kilometers from Mumbai.

So price seems okay if growth remains as it is

cash is not there ??

Does freshtrop has own land for fruit crop?

what if India consumes all fruits and nothing remains for export business?

1). Promoter selling just before the results were declared!

1). Low ROE/ROCE business.2. Seasonality and affected by nature’s vagaries.

IIT Mumbai pass out management.

buy freshtrop then …

MD  is one of the first movers in the industry and seemed to have done several innovations.

However, one must remember that the business is quite seasonal and prone to some issue or the other.

1). Fresh fruit

2). Food Processing

Fresh fruit segment involves mostly exporting of grapes and the grape season starts from January and ends in June every year. This segment contributes around 80% of the top line and more than 100% of profit. That is why around 85% of their sales is in Q1 and Q4 of every year.

Food processing involves processing of food pulps primarily mango pulp, pomegranate pulp, tomato puree, guava pulp etc.

Not a great shareholder letter no futuristic discussion

 

Low temperature storage of fruits is not economical and hence not in practice for domestic  market while raisin making solves the problem of grape perishability to some extent but the price realization is not stable.

Govt help and funding is there for food processing.

The sourcing of fruits is very difficult. There are businesses in their vicinity which have closed or are doing losses and have high debt.

There are not many listed companies in the food processing sector (Jain Irrigation has food processing segment but it is small in the overall scheme of things). It’s a tough sector to get into with considerable investments required in it. There is very few to none success stories in food processing sector.

What’s the “moat” in this business – food processing gets constrained on the supply side beyond a certain point unless it’s a branded play.

1). The no. of certifications the company has, which it has been renewing for many years.

2). Its long standing direct relationships with big clients like ASDA, Tesco, etc.

4). Improving Sales/Invested Capital with improving margins, is another excellent indicator of improving competitive advantage and therefore, presence of moat.

can be beneficial investing at this point in time because of good march and june but overall for long term doesn’t look so good ..

no visual growth no futuristic thinking

can take a tracking position though

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