India focused Portfolio Advisory - Exp of 40+years, Das Capital Management and Advisors

Arun Thirumalai

India focused Portfolio Advisory - Exp of 40+years

Das Capital Management and Advisors

Das Capital is a research boutique with an aim to continuously map and plan the investment needs of investors focused on India. We have a six member research team with a combined experience of over 40 years as a part of our investment wing. Our team assisted in the setup of Premji Investments, which was one of India’s first family offices focused to managing Mr.Azim Premji personal wealth. We also serve as a research team to two Indian private equity energy funds “Small is Beautiful” and “KSK Emerging India Energy Fund”.

Equity Bottom-Up

Prataap Snacks Limited incorporated in 2009 headed by Amit Kumat, Managing Director &amp; CEO a first generation entrepreneur has been gradually gaining market share in the INR 550bn (USD 8.5 bn) Indian snack market. With its strategic pricing and marketing strategies, Prataap snacks have been able to gather good traction and brand recall at the ready to eat snack market. The company's market share has increased from 1% in 2010 to 4% in 2016 and is one of the top 6 companies in terms of revenue in an industry that is dominated by unorganized and local players. It has a significant presence in East, West and North India and is currently focusing on increasing presence in the South.Key drivers: <ul><li>Demography:  The young demographic profile of India with more than 50% population under 35 years and increasing disposable incomes will provide long-term growth visibility to the business. The Indian snack market is expected to grow to Rs.1150 bn (USD 18 bn) in 2021 from the current size of INR550bn (USD 8.5 bn) at a CAGR of 16.11%.</li><li>The shift from Un-organised: The unorganized snack market is estimated to be worth INR 330 bn (USD 5 bn) in 2016 which is almost 2/3rd of the overall market,  the potential for growth for the organized players like Pratap is manifold, as they are expected to gain market share from the unorganised players and in addition the overall industry growth.</li></ul>Wafer thin margins: Being a late entrant into the market, Pratap has adopted a value for money approach to gain market share. This has led to severe volatility in profitability as the operating margins are between 10.82% and 4.67%. We believe this trend will continue as the company tries to establish itself in newer markets and categories.Despite the growth potential, we believe that the stock is expensive as it is currently trading at 284x its FY17 EPS, 100x its FY18 EPS and 67x its FY19 EPS.

Prataap Snacks Limited incorporated in 2009 headed by Amit Kumat, Managing Director &amp; CEO a first generation entrepreneur has been gradually gaining market share in the INR 550bn (USD 8.5 bn) Indian snack market. With its strategic pricing and marketing strategies, Prataap snacks have been able to gather good traction and brand recall at the ready to eat snack market. The company's market share has increased from 1% in 2010 to 4% in 2016 and is one of the top 6 companies in terms of revenue in an industry that is dominated by unorganized and local players. It has a significant presence in East, West and North India and is currently focusing on increasing presence in the South.Key drivers: Demography:  The young demographic profile of India with more than 50% population under 35 years and increasing disposable incomes will provide long-term growth visibility to the business. The Indian snack market is expected to grow to Rs.1150 bn (USD 18 bn) in 2021 from the current size of INR550bn (USD 8.5 bn) at a CAGR of 16.11%.The shift from Un-organised: The unorganized snack market is estimated to be worth INR 330 bn (USD 5 bn) in 2016 which is almost 2/3rd of the overall market,  the potential for growth for the organized players like Pratap is manifold, as they are expected to gain market share from the unorganised players and in addition the overall industry growth.Wafer thin margins: Being a late entrant into the market, Pratap has adopted a value for money approach to gain market share. This has led to severe volatility in profitability as the operating margins are between 10.82% and 4.67%. We believe this trend will continue as the company tries to establish itself in newer markets and categories.Despite the growth potential, we believe that the stock is expensive as it is currently trading at 284x its FY17 EPS, 100x its FY18 EPS and 67x its FY19 EPS.

Prataap Snacks Ltd: Margins Thinner than Its Wafers!!

India

Prataap Snacks Limited, doing business as Yellow Diamond, manufacture snack foods. The Company offers potato and corn chips, puffs, pellets, crisps, nuts, and other food products. Yellow Diamond serves customers in India.

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Prataap Snacks Ltd (DIAMOND IN)

Prataap Snacks Ltd: Margins Thinner than Its Wafers!!

Prataap Snacks Limited incorporated in 2009 headed by Amit Kumat, Managing Director & CEO a first generation entrepreneur has been gradually...

Das Capital Management and Advisors

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