Venkys (India) Ltd

Chicken Chengezi

Company Details: Google Finance, Kotak Securities

Around the same time last year, bird flu broke out in India and everyone was scared of chicken. They dint want to eat it, they dint want to see it and they dint want to own any chicken stock. In Feburary we had finished our final exams at MDI and everyone was preparing for their respective India tours. Me (aka 04p048) and Utti Singh (aka Ram Singh aka 04p122) along with a guy called hawk (aka Gandhi aka 04p049) and the biggest hogger in MDI called bhai went to have Chicken Chengezi @ Azad Market, New Delhi. Believe me the Chicken Chengezi there is something you should not miss if you have some time to spare in Delhi and savour non-veg food. Bird flu was at its peak in Feb/March and we had to wait for over 20 minutes just to get a seat, leave alone hogging on to the Chengezi. In sharp contrast the hatchery stocks plummeted to their 52 week/lifetime lows.

Venkeys the largest hatchery in the country with a share price of 170 odd was available for a share price of 120 odd which further went down to 90 odd (though only for a couple of days). The market cap of the company today is around 108 crores with the share price at around 112. Consider this with respect to a reported profit after tax of 16 crores for the previous 2 years, 8 crores for 3rd last year and 10 crores before that. For the FY 2006 Q4 the company posted a loss of around 4 crores and a PAT of 11 crores for the whole year.

The company also boasts of R&S of 104 crores compared with a market cap of 108 crores. About 4 months ago, the promoters bought back around 5% stake at around 120 bucks per share. I have not stopped eating chicken though have considerably reduced it for the love of fish and mutton. But I am sure Utti, Bhai and Hawk are still very much at it and hopefully so are millions of others. The company has a total debt of 83 crores which is or can be a cause of concern. The company also has a book value of 120 bucks per share and is trading at a P/E multiple of 9.

Well really don't know why someone should pay more for a company which makes some excellent frozen foods, read chicken keema, my staple diet on so many Saturday mornings in Pune, after bunking the DSGT (discrete structures and graph theory) classes. I think staying in the class rather than cooking keema, would have saved me from loosing some money behind hens and saved people from the painful exercise of reading this (assumption you are still reading).