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Tuesday, February 15, 2011

Sabero Organics: 3rd quarter results updates

An insight in the 3rd quarter results (Dec'2010) of Sabero suggests that there was disruption of plant operations for more than 20 days due to Project and Quehst activities, which resulted in lower sales and lower profits. So the lower sales and profits were not due to business reasons but due to operational reasons. The business reasons have far more reaching impact and could show up in subsequent quarters/years as well. The operational reasons are generally limited to the same quarter. Also I would not like to judge the company based on a single quarter's performance. In my view a single/couple of bad quarters of a good company could be an opportunity to enter into the stock.

On business front there are couple of positives:
1) The major project activities in Sarigam are expected to be completed in this quarter for the major expansion of Chloropyriphos and Monocrotophos plants, ETP, Incinerator, Evaporators and gas power plant, while propineb plant will be completed in the next quarter.

2) Sabero was generating 60% of revenue thru' exports. The export sales for the nine months ending on Dec 31, 2010 was 51% of total sales, while the domestic sales was 49% of the total sales. The export sales of the Company for the quarter ending on Dec 31, 2010 were 56% of the total sales, while the domestic sales was 44% of the total sales. It suggests that the dependency on exports is coming down and becoming more balanced.

3) The Company has signed two MOU's at Vibrant Gujarat, 2011 for its Rs.27 Crore expansion project in GIDC Sarigam, as well as its new plant coming up at Dahej SEZ Ltd at a cost of Rs.55 Crores (potential to generate an additional revenue of Rs 110-150cr).

Trust it helps.

Niteen S Dharmawat

IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that I consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above. I sincerely request you to do your homework before you take any position whatsoever. I, my relatives or friends may have position in this company.

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