Scripscan:Sita Shree Food Products Ltd
cmp:8
Code:532961
Story:The promoters of SSFPL are in the business of food grains trading since last 35 years. This helps the Company to procure its raw material at competitive prices throughout the year. It is benefited due to the past track record of the promoters in sourcing commodities as well as running existing business. Also By virtue of the presence in the industry for a considerable period of time, the Company has been able to develop a customer base which can be leveraged for the expanded operations as well as new products manufactured through proposed project.Sita Shree Food Products Limited engages in the processing, manufacture, sale, and export of wheat and pulses in India. The company manufactures various wheat products, such as chakki atta, maida, rava, suzi, and daliya. It also offers gramdal, upma, chiroti pasta, and chic pieces. The company offers its products under the SITA SHREE, SITA SHREE GOLD, and REGULAR brand names. Operating profit margins in this business, however, have been thin, hovering in the 3 per cent range in recent years.Margins would continue to be wafer thin, given competition from much larger and unorganized players in the flour milling segment.Much of the Indian food processing industry is unorganized and fragmented with many small and medium-sized companies. The Company is facing competition from around 5-6 mid-sized flour mills in Indore region for its existing products. Besides small unorganized sectors the Company also faces stiff competition from major players like Ruchi Soya Industries Ltd, Gujarat Ambuja Exports Ltd, K S Oil etc. for marketing of products manufactured i.e. Soya Oil, lecithin.The Company at present does not have much marketing network. The Company will face difficulties to market its existing as well as proposed manufacturing products particularly in branded segment which has higher margins.It delivered 136crs of topline and mere 94 lakhs in bottomline fy11.That gives an EPS of less than 50 paisa.Based on the valuations the company its still expensive as compared to its peers. Keeping in mind the competition faced by the company, seasonality nature of the business and valuations,I suggest investors to avoid and if already possessed,to dispose it off at rallies.
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