White Organic Agro LtdQ3 FY18
White Organic Agro Ltd Q3 FY18 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Price: ₹3.86P/E: 7.3Market Cap: ₹14 CrSector: Agricultural Food & other Products
Management growth scorecard
Revenue
Category 2
Margin
Category 3
Fundraise
Yes
Order
Yes
Capex
Yes
3 of 5 growth signals are positive.
Full analysisRevenue guidance
Category 2- →The company expects a conservative topline (revenue) growth of 25% year-on-year.
- →Expansion plans include increasing leased land to 3,000 acres by end of FY2019, focusing on value-added products.
- →Export opportunities are promising, especially with clients like Innovative Cuisine, with potential volumes expected to grow as pilot projects expand.
- →Revenues from the Dubai subsidiary are around Rs. 10-12 Crores for half-year, expected to be similar for the full year.
- →The company aims to strengthen presence in the frozen food export segment and increase supply to export houses that require consistent vegetable flow.
- →Focus remains on B2B clients initially, with growth potential in value-added organic products (e.g., freeze-dried Aloe Vera powder).
- →Potential to increase client base beyond the current main client, with numerous enquiries coming in from export houses.
Margin guidance
Category 3- →The company expects a conservative topline growth of 25% year-on-year (Page 13).
- →Profit after minority interest for H1 FY2019 grew 176% YoY, indicating strong earnings momentum (Page 5).
- →EPS for H1 FY2019 stood at Rs. 5.52, a growth of 96% YoY (Page 5).
- →EBITDA for Q2 FY2019 increased by 200% YoY and for H1 FY2019 by 272% YoY, signaling improving operating profitability (Page 4).
- →Expansion plans include increasing cultivated land to 3000 acres by end FY2019, focusing on value addition to products (Page 11).
- →Expected margin expansion with new export products like freeze-dried Aloe Vera powder, though exact numbers not specified (Page 8).
- →The company aims to remain debt-free, focusing on organic growth and capital infusion possibly through equity (Page 10).
- →Early stages of client growth with Innovative Cuisine and other export clients indicate potential scalability in revenues and profits (Page 13).
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Fundraise plans
Yes- →As of October 31, 2018, White Organic Agro Limited is currently debt-free and intends to remain so.
- →The company is at a critical juncture, considering capital expansion, particularly for setting up facilities like freeze-dried powder production.
- →Management is evaluating whether to raise funds via equity or other means for capital acquisitions.
- →Promoters have shown an intention to increase their stake, possibly through a preferential issue, which could infuse funds into the company.
- →No specific current fundraising via debt or equity has been finalized.
- →The company prefers to avoid debt and may seek equity infusion aligned with expansion plans.
Order book
Yes- →White Organic Agro Limited currently has a significant order from Innovative Cuisine Private Limited for cultivation and supply of long beans and cluster beans.
- →Innovative Cuisine has shown interest in increasing cluster bean cultivation on 100+ acres with mutual consent to buy the entire produce.
- →Trial pilot projects with Innovative Cuisine cover various items like long beans, chickpeas, Toor Dal, G4 chili, green gram, black gram.
- →A trial project of cluster beans generated revenue of around Rs. 65 lakhs, indicating future growth potential.
- →The capacity of Innovative Cuisine to supply around 5,000 containers a year positions it as a major export client.
- →Discussions are underway with other frozen food businesses for similar client engagements.
- →Export orders from new products like freeze-dried Aloe Vera powder are expected to start after organic certification completion around December 2018.
- →The export business is still in pilot/trial stages, with scope for expansion as systems and training mature.
Capex plans
Yes- →White Organic Agro Limited is at a juncture where they may invest in setting up their own freeze-dried powder facility instead of outsourcing, especially for products like Aloe Vera powder, likely after assessing export order volume post-December 2018 certification.
- →The company remains debt-free and intends to continue so; any capital investment will likely come through equity infusion.
- →Promoters intend to increase their stake soon to fund expansion and capital acquisition.
- →No specific capex numbers or timelines were given, but there is emphasis on possible equity infusion to support facility expansion.
- →Medium-term land acquisition target is capped at 3000 acres, focusing more on value addition than further land acquisition, suggesting investments will prioritize processing and product enhancement over land.
How does White Organic Agro Ltd rank vs peers in Agricultural Food & other Products?
Pro feature1White Organic Agro Ltd
Rev 2Mar 3
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