Starch and Sweetners manufacturer Riddhi Siddhi Gluco Biols is set to announce outstanding results in the June quarter. This agroprocessing company’s underperformance is mainly due to fire in Gokak plan which disrupted its business for 6 months. Both Uttarakhand and Gokak (Karnataka) plants are now operating and company is expected to post turnaround results in the coming quarters. Company bought Bio-polymers business from Hindustan Unilever and this midcap corn-wet-miller company is planning to use this Pondicherry unit as a research hub.
Riddhi Siddhi Gluco stock price analysis:
CMP: 188.25
P/E: 10.6
Book value: 123
1 year high-low: 309-166
1 year target: 350-380. One will surely get more than 80% returns in 1 year. EPS for FY09 will be around 35-40.
Why Riddhi Siddhi Gluco is a “must buy”?
1. EPS is expected to increase from 18 to 40 by conservative estimates.
2. Sales are expected to grow by 70% and profit may rise by 120%, according to analysts.
3. Agro-processing has huge prospects.
4. Government will promote agriprocessing business aggressively in the next budget.
5. Aggressive expansion plans will help the company in the next 2 years to post good results.
Verdict: Riddhi Siddhi Gluco Biols is a very good stock for accumulation to get more than 80% annual returns. Accumulate this stock without hesitation on any fall for long term investment. This midcap company set to outperform the market in the next 12 months.
