Hello Sir,
In this market correction, I was screening for growth stocks and came across Aries Agro.
The company hasn’t delivered great returns over the last 10 years; however, since FY 20 the company has been doing well with consistent growth in sales and profits, improvement in cash flows and balance sheet and the PE is 10.
The issue with the company is that it doesn’t do con-calls; however, luckily, the management shares fair bit of information in AGMs.
Below, we have shared notes from FY 24 AGM and a consolidated table with notes from AGMs of the last 3 years.
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Aries Agro – Notes from FY 24 AGM
- The company introduced new products for chilies, spices, millets, and beetle wine, and also Aries pro. These products added to the range of specially designed crop specific nutrients
- Reduction in Import Dependence for raw materials: Import dependence has been reduced, with raw material imports decreased from 52% in FY 2010-11 to 28% in FY 2023-24. The most successful import substitution initiative was the manufacturing of ARIES HD range reducing our dependence on water-soluble fertilizer imports from China
- Online bookings for the 2024-2025 financial year totaled up to Rs 835 crores, with an expected gross revenue of 800 crores for FY-25
- Growth Plans: The company responded that growth trends should be sustained and that there are plans to invest in automation with capital expenditure of 10-12 crores. Additionally, 22-23 crores will be invested in new units at SYA
- Strategy to reduce bank debt: The company’s biggest focus area is to reduce the dependence on the bank debt. The company provided interest to its trade channel partners for up to 60 to 90 days for their advance money; using this approach to secure market share and utilize the additional cash flow to retire bank debt
- Working Capital Management: The company has reduced its working capital requirements by collecting a significant number of advances from its customers
- Money Stuck with Subsidiaries: The company has taken steps to recover the money stuck with Golden Harvest and M/s Amarak Chemicals, and these subsidiaries are now operational and repaying through products and money. The company expects to recover its investment money in the M/s Amarak Chemical in about 3-4 years
- Justification for recent purchase of Vehicles: The company stated that the purchase of vehicles was for mobility for its employees for market development
- Reasons for higher Discounts & Rebates for selling of Products:
- The management of Aries Agro Ltd addressed concerns about rising discounts and rebates, explaining that these are pre-planned and factored into the product’s base price
- Discounts are not a result of uncertainty or product push but are designed to attract dealers by offering higher trade margins compared to competitors
- The company’s pricing policy includes discounts in the headline price before releasing the price list to the market
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Disclaimer: This is not a recommendation to buy/sell any of the stocks mentioned above. The securities quoted are for illustration only and are not recommendatory.
Ekansh Mittal
Research Analyst
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