Oct 12, 2012

Camson bio/buy/sell/outperformer/multibagger_Be and Make

Investors with a long-term perspective and a high-risk appetite can buy this stock at current levels and add on every dip strategy. Investors can take exposure in the stock, considering the company's ability to cater huge opportunity in the market.

Company background:
Camson Bio Technologies Limited is a leading agricultural biotechnology company. Camson delivers innovative products to maximize agricultural productivity and sustainability while reducing the environmental impact.
Founded in 1993, Camson combines traditional knowledge in agriculture with latest advances in safety and protection to market a wide range of products. These include hybrid seeds, bio-fertilizers and biocides that are non-poisonous, eco-friendly and residue-free.
Camson has a strong focus on in-house research capabilities, which has resulted in a successful portfolio of products over the years. Its intensive research programs in these areas have helped it build a wide-ranging product portfolio including 22b iocides, 7 bio-fertilizers and 17 hybrid seeds.

Visionary promoter to cater the huge opportunity in the market:
Dhirendra Kumar, Managing Director and promoter of Camson holds a M.Sc. in Plant Genetics and Breeding and an MBA in Marketing from Punjab Agricultural University, India.
He also holds an MBA in Export Management from IIFT, New Delhi.
In his previous experience, as General Manager at ITC Ltd., Kumar took over a loss making division and reworked the entire product range, positioning and strategy to transform it into the fastest growing and most profitable division at ITC. Further, as the Marketing Manager at the Pioneer Seed Co., he held the distinction of leading the company to new heights in terms of market share and profitability. His previous experience also includes positions at Ranbaxy and Coromandel Indag. Recognizing the potential in environment-friendly technologies, Kumar has led Camson through various phases of growth and expansion in the last 17 years, including the company’s IPO in 1995.

Share holding pattern:
Promoters                                                                          31.56
Mutual Funds and FIIs                                                       06.33
Corporates                                                                        12.30
Non Resident Indians                                                         07.06    
71 Individual shareholders in excess of Rs. 1 lakh               17.28

So, the weaker hands having the stake of around 24% and is going to change hands before it skyrocket. 

The company is not having good corporate governance in terms of its internal cost systems as auditors pointed out in their reports. In last couple of years the company is showing huge expenses on its balance sheets. It is a concern of internal control system. Why the company is going to spend such huge amounts for rebates, business promotions?

Rebate & Discounts
Business Promotion

Still, the company is under the one man show, i.e., of the Dhirendra Kumar. If it wants to become the market leader in this sector then company should not depend more on a person hence, some other reputed persons subjected to this sector should join the management will give cushion to the shareholders dreams.
The management needs to have a priority to change its lapses in this, otherwise it erode all the reputation what it has gained since,1993.

Recent Events:
Appointed Mr.Santhosh Nair as CEO who has vast experience in banking space who worked for Merrill lynch and HDFC. Camson appointed suitable persons in suitable places like changes in Chief corporate development officer, Company Secretary and Chief Legal Officer, as the Compliance Officer of the Company.Promoters converted the warrants in to equity of each Rs.75/- and some of the promoter also buying small quantity in the open market in the recent times. The company increased authorized share capital and given employee stock option scheme for the year 2012. The Company has entered in to a Business Correspondent Appointment MoU with HDFC Bank. In tandem with RBI's directive about assisting farmers through the financial inclusion initiatives of banks, Camson has entered into an arrangement with HDFC.

Be and Make’s View:
In my view, the sector has huge potential and company is well poised to cater the huge opportunity.  As hybrid seeds on an average account for only 20% of the total vegetable seed market, there is 80% or INR 20 bn unexplored market which hybrid seed companies can tap in the years to come. Increasing public awareness of serious long-term health hazards posed by chemical pesticides and considering very low penetration levels (of ~3.5% based on global pesticides market) biocide companies are looking at better future prospects. In the upcoming decades it is the sun rising sector and one can have this small cap stock in small quantities to have multifold returns. The company had very good CAGR growth in top line and bottom line in last five years. The PE and Debt to equity ratio is also very encouraging. The other key parameters like ROE, ROCE are also in the positive side. The company already completed its CAPEX and enhanced its capacity at the end of the FY12 and its results likely to come in to the top and bottom lines in the upcoming quarters. It is a long term bet, trading in BSE only and having low liquidity one should buy it in small quantities and can add in every dip and hold it for long term.

With thanks
Be and make

To get the full report in pdf download here: camson bio_beandmake

1 comment:


Sounds like a great stock pick.