Hi Everyone,
Hope you are well, Today we are looking at a very interesting stock Kaveri Seeds which generates good cash flow and is undervalued.
Technicals :
1. Currently it is in Downward momentum
2. One should take the entry if it breaks above 510-520 for good upside
3. Good accumulation in the share
Fundamentals:
1. Company is in the Seed business with a PE ratio of 8.9 which looks reasonable, but we need to discount the future cash flow to arrive at a forward PE ratio. Since the profits have been growing at a pace of a minimum of 20% we can safely assume that company value doubles every 5 years.
2. Agriculture is the backbone of the Indian Economy, Lot of countries dependent on Indian crops
3. The company has cash and Investments worth about 1000cr versus the market cap of 3000cr. If the company does not have an interest in growing their business further, it would easily offer value to the shareholders through a lot of buyback with higher prices.
4. Nil or Negligible debt
The suggested methodology is to start accumulating for the long term on dips and sell in long term with a good profit percentage. The current price is back to pre-covid levels and the business outlook looks promising with such an incredible net profit. While people are shifting the momentum to Financials, Tech it is always good to buy some undervalued for the long term in the Agri sector.
We have had some incredible runs in our previous suggestions, we hope to buy low and sell high and more to come in the future.
Please feel free to let me know if you have any questions.
Disclaimer: This is just my view and not a recommendation :)
Hope you are well, Today we are looking at a very interesting stock Kaveri Seeds which generates good cash flow and is undervalued.
Technicals :
1. Currently it is in Downward momentum
2. One should take the entry if it breaks above 510-520 for good upside
3. Good accumulation in the share
Fundamentals:
1. Company is in the Seed business with a PE ratio of 8.9 which looks reasonable, but we need to discount the future cash flow to arrive at a forward PE ratio. Since the profits have been growing at a pace of a minimum of 20% we can safely assume that company value doubles every 5 years.
2. Agriculture is the backbone of the Indian Economy, Lot of countries dependent on Indian crops
3. The company has cash and Investments worth about 1000cr versus the market cap of 3000cr. If the company does not have an interest in growing their business further, it would easily offer value to the shareholders through a lot of buyback with higher prices.
4. Nil or Negligible debt
The suggested methodology is to start accumulating for the long term on dips and sell in long term with a good profit percentage. The current price is back to pre-covid levels and the business outlook looks promising with such an incredible net profit. While people are shifting the momentum to Financials, Tech it is always good to buy some undervalued for the long term in the Agri sector.
We have had some incredible runs in our previous suggestions, we hope to buy low and sell high and more to come in the future.
Please feel free to let me know if you have any questions.
Disclaimer: This is just my view and not a recommendation :)