Sunday, June 1, 2014

Karuturi Global- Mutli bagger Idea



Karuturi Global is a world leader in production of cut roses with operations spread across Ethiopia, Kenya and India. With an area of over 292 hectares under Greenhouse cultivation, Karuturi annually produce around 555 million stems of quality cut roses, essentially for exports to high-value markets.
KG have identified agribusiness as our next prime growth domain & have taken up cultivation in Ethiopia on a mega scale to become a key player in the global agro-products market. Other business interests include food processing, floriculture retailing, and information technology.




KG is essentially-promoter-centric-ambitious-vision of Ramakirshna Karuturi. KG seems to be another multi bagger penny stock with high risk high reward.
after essentially establish base in Bangalore KG has migrated to Africa in search of better cost in order to compete in the world market. with huge tract of land and readily available labor the first leg into Kenya have paid huge return specifically with the acquisition of Sher Agency which made KG one of the largest players in cut stem roses. KGL has invested huge sums into expansion into Ethiopia and  not been rewarded due to bad luck & natural calamities & WC requirements.  KGL seems to be lacking in expertise in large scale farm management which is being rectified. Agri business need at least three years gestation period after which the scale of operations will start showing returns
QUESTIONS
1. Will the company survive and consolidate in the next three years?
2. Will KGL ride out the uncertainty of political & natural changes, sort out power concerns?
3. Will KGL manage cash flow and raise WC requirements through FCCB or high interest loans.
4. Will KGL manage to increase promoter holding and get out of the pledged share trap.

Positives.
1, KGL has a fantastic base business (cut Stem roses) with a huge European market shares. (aided by tax exceptions)
2. RamaKrishna Karuturi, whom i think is honest-enterprising promoters who got the experience and the ambition to follow his dream.

if the company survives for the next three years with any major mishaps then Karuturi will truly be Global player in food verticals.


CMP RS 1.75/-