Thursday, October 15, 2009

Diwali Wishes-Temptations

Dear Readers,

Wish you all and family a happy, prosperous and sweet Diwali.

I have registered a domain for this blog and readers can access it by typing

I wish to recommend a scrip to readers as well to my clients as my present for this Diwali. The scrip is sweet indeed as the company involved in the field of food processing including fruits and Vegetable. One more imperative reason to suggest this stock as it comes under one of my much preferred sectors, Agriculture! the only sector, which have'nt a way back.

India with its population of about 1.10bn people, growing @ 1.6% pa is a colossal and growing market for food products as well as other processed eatables. Spending for food is the single largest element of personal consumption expenses. The increasing numbers of modern retail stores are itself the sign of high growth rate of Indian retail revolution. The consumer lifestyles are changing drastically with an increasing need of eased and hygienic edibles. All of the above factors will help to grow the underlying demand for the convenient food whether it is fresh or frozen. Above all, the role of food processing and preservation becomes significant since agricultural production is targeted to double in the next 10 years by Govt of India.

BSE Code - 519228
Sector - Agriculture(Food Processing)
CMP (15/10/2009) - 36.10
EPS - 23.61
PE - 1.55
BV - 98.79
FV - 10
52 Wk L/H - 18.85/264.75
Buy Range - 30-40
Ever High post 2000 - 350(Jun 2008)
Market Cap - 92.14 Cr
Chairman/MD - Vinit Kumar
Promoter(s)’s holdings - 21.13%

Temptation Foods Limited (TFL) established in 1991, affianced in the frozen processed fruits and vegetables belongs to Agricultural Sector. The company uses the most modern IQF (individual quickly freezing) technology for preserving the products. TFL has established it’s modern processing facility in the midst of fruit and vegetable farming zone at Jejuri, Pune. The plant involved in deep freezing of mangoes, pineapples, papayas, melons, grapes, strawberries etc. TFL also processes a variety of vegetables like green beans, green peas, cauliflower, okra, corn, carrots, chillies(red and green), ginger-garlic cubes, samosas, parathas, paneer products and a variety of other ready to serve eatables. The company has an Installed capacity 4000 MT for IQF Frozen Fruits & Vegetables.

TFL processes a variety of vegetables and fruits for the Indian markets and also exports to several of the biggest brands in USA, UK, Europe and the Middle East. The company has acquired the Everfresh brand of frozen Fruits and Vegetables from the K. K. Birla group in November 2007, one of the biggest domestic brands in the segment, Everfresh has reached in the top line of Rs 200 million in 2007. Ever Fresh offers quality IQF products over 50 types of vegetables and fruits such as French beans, carrots, cauliflower, coconut, sweet corn, tapioca, mixed vegetables, okra, spinach, karela, green peas, drumstick, brinjal, onions, Green Peas, American Sweet Corn, Baby Corn, Broccoli, Palak, Sarson ka Saag, Shredded Coconut under Delika brand name and different varieties of fruits like Alphonso Mango etc..

The company also processess, fig and orange, strawberry, chunky orange marmalade, plum, mixed fruit, and peach; sauces, such as pizza, Italian pasta, Szechwan, and Mexican salsa sauces; and dressings, including eggless mayonnaise, garlic mayonnaise, whole grain mustard, Italian salad dressing, French dressing, fresh mayonnaise, and sandwich spreads under Karen Anand brand name.

The company has recently introduced combination products like Gajar Mattar, Mattar Paneer, Aloo Mattar etc. Ever Fresh farm products are procured from Haryana, Punjab and the Terai region, the heart of the Northern Agri-belt of Western India. The farm produce is plucked and processed with the IQF technology within 24 hours. The products are then packed in unique food grade packaging at -20 degree C. The company claims that 'Ever Fresh' range of products are processed and packaged without any chemicals and preservatives and meets the national and international quality standards including FPO.

TFL today represent one of the biggest organized publicly listed companies in this sector. The Karen Anand range of gourmet products has also become a part of TFL’s list. The company produces the Karen Anand range of products at their plant in Jejuri near Pune. TFL processes Fruit and Vegetable produce at 6 plants: Sonepat, Karnal, Rudrapur, Kashipur(2 plants) in North India and Jejuri in West India. The plants have a combined annual capacity to process, pack and Individually Quick Freeze (IQF) over 60,000 tonnes of Vegetables and Fruits. TFL’s installed capacity of above 30,000 Tonnes is the largest company with such facilities in the country. Similarly, in-plant cold stores have a combined capacity of over 5,400 MTs again the largest such cold storage in India.

The company procures fresh fruits and vegetables mostly from the Terai region in North India and the Agriculture Produce Market Committee (APMC) of Mumbai and Pune. The plants are strategically located in the heart of the agricultural zones. TFL is the first Indian frozen food Company to get ISO 9001 certification. The Company also has International Quality Accreditations such as the HACCP and RINA ISO 9001:2000 approvals. TFL exports 90% of their products, however the company has recently started supplying goods domestically under the Everfresh brand. Nearly all large domestic retail chains are TFL clients. This segment includes retail chains like Metro, Shoprite, Big Apple, Spencers, Reliance Fresh, Spinach and Food Bazaar.

My View on the scrip

I expect substantial multibagger returns from this scrip with a 2-3 year term. The current valuation and growth prospects are really attractive. The food processing sector becomes significant as agricultural production is targeted to double in the next 10 years by the Govt of India. It is expected that the fast growing retail chain spectrum is an added advantage for the company for bulk orders from the retail giants. The increasing population and changing food habits even in urban areas will surely beneficial for the company. The recovery symptoms from the recession turmoil must increase the consumption by foreign/domestic clients. TFL comes under a distinctive class in this sector as well as keeping an enhanced reputation in its clients. A bit of speculative history is there with the scrip but still I expect Its a safe bet for long term.

Readers are requested to place their comments on the scrip.

I am not responsible for your investment decisions, please do your own research before make any investment decisions.

Shabu T -


  1. Dear Shabu
    Wish you and your family happy Diwali! Appreciate your effort in researching and recommending a scrip to your readers. God bless you.

  2. Shabu Sir,

    Felicitation for New Domain. :).

    Coming to Agri Sector.

    Contribution of Agri to Indian GDP is less Even if majority of indian population are engaged in the activity of agri.

    Lots Of agri-lands are converted to Non-Agri Land and in that land they are Building Apartments, Complex. If ppl continue to convert Agri Land to NA..then we may left out to be less Agri-Land..If that happens there will be less supply of foods for more demands.

    People are enjoying profits of converting Agri Land to NA..which govt. should stop.

    If there are less Agri Land we may see Sky Scraper of Agri Land which is the only solution to meet demand.

    Now Farmers should learn new technique like Hydroponics[less water more fruits, i learned this technique in Bangalore]. Example Here.

    Happy Diwali to You and All your readers. May this Diwali bring Scintillating opportunity to All :).

    Stay Healthy.

  3. Dear MRC,

    Thank u very much for the comment and wish u and family the same.


  4. Dear Mahesh,

    You are absolutely right. I am fearing too as we are heading to an alarming situation. Let me tell you, the reason I am preparing to launch 2 domains to make awareness of the importance of agriculture.
    ( &

    I have not made any post yet, but wish to spread the importance of farming as a culture. lest our coming generations will suffer worstly. I wish to publish genuine articles related to the subject which may be eye opener to the new generations

    Thanks for the informative link.


  5. Dear Shabu,

    Thanks for your really nice analysis...For sure the agri sector is going to be a big industry in India in the long term. There is lot of unexplored potential in this sector.

    I also like the stock Himalya International in this sector. I guess these stocks will surely be future multibaggers.

  6. Thank you Faisal,

    Yes, Agri must have to boom. As syou said, Himalaya too is a good scrip.

    Happy Diwali


  7. Temptation Foods have speculative history. But it is difficult to make money from good stocks. Many investors lost money by investing in satyam when it was a good stock. Many investors made money by investing in satyam when it became bad stock. Many conservative investors lost money even in this bull market by investing in 'safe' stocks like bharti airtel. We should sell good stocks before the sector becomes saturated. But it is very difficult to sell shares of good companies and buy shares of bad companies.


  8. Dear Mr.Shabu,

    I have been following your posts continuously, and first of all I want to congratulate you for all your wonderful writings. I am new to stock market and so my views may be a bit bookish and sometimes kiddish too. I have not tried your picks yet, as I have started working with stocks very recently and right now I am concerned about the valuations.

    I have few concerns about Temptation Foods which I am listing here. May be your experience would guide me a lot.

    1. Very high FII holding (nearly 40%), and very less publicly available shares (less than 10%)
    2. They have floated new shares twice in last 5 years. So there are chances for the EPS to get diluted further in the coming years.
    3. They have taken 100Cr debt recently. They dint take much debt till last year. What kind of expansion are they in suddenly? Or are they acquiring any other company?
    4. Sundry Debtors look really very high. In fact it is higher than their Net Current Assets.
    5. They have very little cash in hand. Thankfully they have some investments to support. But their cash structure looks very questionable.
    6. The company is very much capital intensive and leaves very thin profit margin.
    7. The taxes they have paid every year in the past 5 years is very very less when compared to their reported PBT.

    I am sure many of the issues that I have listed wont be practical at all, as I am not sure how the other companies financials look like.

    Madan Kumar Rajan

  9. James

    Thanks for the comment.


    The way I am looking at a stock is bit different. I am fully aware about the things you mentioned and I count the technicalities of a stock at its minimum, rather the sector perspectives. I think the points you mentioned about tempation Food is based on past, where a lot big guns even knocked out with superior technicals. I am looking to the future based on the industry they engaged, wish to relate the favourable scenario making up around the company and it's products.

    I have already mentioned the speculative history about that company, normally I hesitate to recommend such stocks, but I hope it will be a tempting stock in recent future, the reasons I have qouted with best of my knowledge.

    It is a usual practice that new investors normally hanging around the technicals in their initial days, cause the readily available data and the tend to think logically. It is good, but I strongly believe that reaching a decision on a particular stock should based on the potentials in all respects, with a look to future.

    Thankk u Madan

  10. Good post Shabu. Madan has mentioned that Temptation has paid less taxes and that might be due to the fact that food processing companies get a good tax break every year and also the subsidy.


  11. Dear Kumaran,

    Thanks for the comment. I values your comments in a great way as a proffessional in the segment.


  12. Dear Kumaran, Thanks a lot for your clarification.

    - Madan

  13. Check interview with Bob Prechter. A scary world is perfect for stocks, and a perfect world is scary for stocks.

    When everything is scarcy, investors will dump the stock and the stock becomes cheap. When stock becomes cheap there is more upside potential than downside.


  14. W.R.T. Madan Kumar Comment...

    I would like to add that 'likely' Multi-bagger stocks need not have furbished Financials in place. The company may be small and upcoming one. The returns may take time to accrue over a period of time, not necessary that returns would accrue at the peak of bull mkts.

    Some fundamentals may not be in place & technicals need not be supportive. Only time would support a view on 'Fundamental' uprise of a Multi-bagger.



The blog is associated with information on Indian stock market and author’s investment view points on various emerging stocks/sectors. The contents discussed in this blog are purely my own personal opinion and in no case weigh it as any kind of recommendation for stock market investment. The sheer purpose of this blog is to educate the interested community on market related subjects based on my experience and I am, in no way, responsible for investment decisions based on the contents described in this blog.

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