Satnam Overseas - Rs.85.00

Incorporated in 1989, Satnam Overseas Ltd (SOL) was promoted by Sri Satnam Arora, Sri Jugal Kishore Arora, and Sri Gurnam Arora as a private limited company but was subsequently converted to a public ltd company in 1992. Today, SOL has emerged as a leading food company from India offering a diverse range of authentic Indian food products with offices and customers in over 57 countries. Apart from being a dominant Indian player in the global Basmati rice market, it is the undisputed leader in the domestic branded Basmati rice segment with more than 35% market share. The company’s flagship brand ‘Kohinoor’, enjoys excellent brand equity both in Indian and global markets and is known for its quality, aroma and flavour. Besides, it has other notable brands like ‘Trophy’, ‘Charminar’, ‘Rose’, ‘Darbar’, ‘Shehanshah’ and ‘Falcon’ in its portfolio.

SOL has world-class, state-of-the-art plants with one of the largest milling capacities in India at 50 metric tonnes per hour. These plants are fully automated through the entire chain of processing of rice from paddy to the packaging of the final product and are fully computer-aided with state-of-the-art cameras to detect impurities and maintain quality, colour and size. The company has a very strong distribution network with more than 170 distributors, 475 stockists and over 2,40,000 retailers across the globe. SOL has also established two wholly owned subsidiaries in the USA and UK and a Joint Venture in Dubai (U.A.E.) to augment its marketing strength in these regions. Last year, it commissioned a new rice milling facility in the UK to process unmilled basmati rice exported from India for sale in England and the continent. For future growth and better profit margin, the company is focusing more on its branded business and is aggressively expanding its presence in ready-to-eat foods (RTE) segment. SOL has an exhaustive product portfolio under its RTE segment including Veg. Pulav, desserts like moong/suzi ka halwa, wide range of heat & eat curries like dal makhani, chana masala, kashmiri rajma, aloo palak, kadhi pakoda, chhole etc, cooking pastes, cook-in sauces, chutneys, spices and a variety of combination (combi) meals. Recently, the company set up a frozen food processing facility at Bahalgarh, Sonepat (Haryana) having a capacity of 20,000 kg per day which has already started commercial production and received orders from Singapore, Mauritius, UK and South Africa. With this unit, its product basket is now diversified to include gourmet products, Indian Breads like parantha, naan, kulcha etc. and a range of snacks like samosas, spring rolls, vegetable kababs, dosa, vada, idli etc. In the near future, it has plans to enter into the business of fresh fruits and fruit based snacks and desserts.

SOL has been awarded export excellence award for fifteen consecutive years since 1991 by the Agricultural & Processed Foods Export Development Authority (APEDA). With the govt. putting special emphasis on food processing, the future prospects of the company are very promising. To funds its expansion and working capital requirements, the company has raised around Rs.90 cr. through FCCB route. For FY07, it is estimated to report sales of more than Rs.600 cr. and NP of 28 cr. This translates into EPS of Rs.14 on its current equity of Rs.19.60 cr., whereas the diluted EPS works out around Rs.10. The 52-week H/L of the scrip is Rs.113/73. Investors are strongly recommended to buy at current levels with a price target of Rs.150 in 15~18 months.