REI Agro – Investment Analysis and Model by Varun Mehta

For questions on the model or Investment thesis, please contact Varun (varunmehta@hotmail.com)

Summary

REI Agro was established in the year 1994 with a vision to consolidate the fragmented basmati rice industry. In a short span of time it has risen to the position of an undisputed leadership in the industry. Today, REI Agro is India’s leading food major. It follows an integrated business model and is equipped with the latest technology available globally. The company operates state of the art rice processing units supplied by world leaders in food processing equipments.

According to the Individual – Audited financial statement for the Year of 2011, total net operating revenues increased with 0.67%, from INR 3,702 tens of millions to INR 3,727 tens of millions. Return on equity (Net income/Total equity) went from 17.51% to 11.96%, the Return On Asset (Net income / Total Asset) went from 2.89% to 4.54% and the Net Profit Margin (Net Income/Net Sales) went from 4.26% to 7.58% when compared to the same period of last year. The Debt to Equity Ratio (Total Liabilities/Equity) was 200% compared to 600% of last year. Free cash flow to the firm shows signs of danger with a decline of nearly 40% from previous year. Finally, the Current Ratio (Current Assets/Current Liabilities) went from 30.39 to 16.77 when compared to the previous year. All this information combined with the detailed analysis suggests a bearish nature of REI Agro ltd.

Regards

Varun Mehta

Phone +91 9999059151

REI AGRO.xlsx

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