Transglobe Food Stock Analysis

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What has been already highlighted in News?

  • In the last 1 year, the stock rose from just Rs.2.94 on 16 September 2019 to 129.75 as on 28th August 2020, i.e. 44.1 times rise or 4313% rise.
  • Straight Spike from Rs 41 as on 21 July 2020 to 129.75 as on 28th August 2020 i.e. rise of 217% in just 39 days.
  • Revenue for FY20 is 0 while PAT is just around 18 lakhs.
  • Promoter Holding is low that is just 14.30%.

Now Let’s Dig Deeper

Some other important Highlights:

  • NCLT Mumbai Branch via its order dated 16th September 2019 approved the reduction of share capital from 28.97 lakh shares of FV 10 each to just 1.44 lakh shares of FV 10 each.
  • After 16 September 2020, when the share price was 2.94%, the trading started on 16 October 2019 at 58.8 i.e. at 1900% rise.
  • The trading volume in the last 1 year is very low. Average is just 295 shares per day.
  • Revenue and Profit has been negligible

In cr

FY20

FY19

FY18

FY17

FY16

Revenue

-0.01

0.00

1.77

5.12

Profit

0.18

-0.19

-0.25

0.04

0.28

Business History

  • Originally incorporated as Pvt. Ltd. company on 11 November 1986 and converted into Public Company in 1993
  • In 2014, Registered Office has been shifted from Gujarat to Mumbai.
  • Company after incorporation started developing infrastructure requirement of the project later engaged in the production of processed fruits and vegetables and AT PRESENT company is in trading of various food grains
  • The company is exploring the possibility of setting a marketing network for the sale of types of fruit jams, tomato ketchup, pastes and purees and varieties of pickles in entire state of Gujurat.
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Management and Shareholding:

  • Promoter holding stands at 14.30% held by Rich and Relish Ice Cream Private ltd holding just 20,720 shares …while the total number of shares is just 1.44 lac shares.
  • Two directors of Rich and Relish are Prabhakar Rameshchandra Khakkhar & Maitri Prabhakarbhai Khakhar. Mr. Prabhakar is also Chairman, MD, and compliance officer for Transglobe Food about whom no information is available in the annual reports or company website.
  • The interesting thing is various Pvt Ltd companies are invested in it but Pvt Ltd. can not get much information about them.
  • Jagannath International Pvt Ltd (4.68%) engaged in the business of commission agents, commodity broker.
  • Saraf Equity Services Pvt Ltd (3.37%) engaged in activities related to financial intermediation.
  • Olympia sales agency Pvt ltd (3.02%) engaged in the wholesale business of a variety of goods.
  • Surveyor Real estate Pvt ltd(1.07%) engaged in buying, selling, renting of real estate properties
  • Another Interesting thing is Rupesh Shah who holds 4.7% of the total holding in the company, also holds shares in some other listed companies whose market cap is below 20cr with low promoter holdings.
  • Cubical Financial Services ltd – He holds 14.6%, Mcap 6cr & Promoter holding 30.8%
  • Alps Motor Finance ltd – He holds 8.89%, Mcap 4cr & Promoter Holding 2.94%
  • Achal Investment ltd – He holds 7.25%, Mcap 1.7cr & Promoter Holding 13.5%
  • Divinus Fabric ltd- He holds 3.94%, Mcap 16cr & Promoter Holding 0%
  • Goldline International Finvest ltd- He holds 1.28%, Mcap 19cr & Promoter Holding 6.36%
  • Inceptum Enterprises ltd – He holds 1.22%, Mcap 3.9cr & Promoter Holding 15.6%
  • Superior Industrial Enterprises ltd- He holds 1.08%, Mcap 8.5cr & Promoter Holding 47.5%
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Financials/Fundamentals:

  • For FY20 revenue was 0 but PAT was 0.18cr first thanks to Other Income to the tune of 0.18cr and Deferred tax benefit of 0.17cr.
  • It’s interesting to observe that the company was not able to do any business for the past 3 years of Trading of various food grains. The last time the company did trading business was in fY17 as a purchase of Stock in trade also appeared with some revenue.
  • Interesting is – Revenue rose by 0% from FY18 to FY19, Employee cost rose by 40% from 3.74lac to 5.20lac. It reduced marginally in FY20 to just 4.9lacs in spite of revenue being NIL …needed to highlight here that Director remuneration and salary to KMP also rose in FY19 by 31%.
  • Other expenses remain above 70% of total expenses two interesting entries
  • In FY19 stock exchange fees rose to 4.8 lac vs 2.8 lac in FY18…what is the nature of it.
  • In FY18 company paid 11 lac for legal settlement in court what was the legal case with no description in the annual report of FY18.
  • Companies total assets as on 31st March 2020 stands at 31.7 lac of which 54% is deferred tax assets while borrowings stands as 26.6 lac so if Deferred tax asset is reduced company total assets are just 14.7 while Current (not Long term) borrowings are 26.6 lacs while Total equity is just 1.08 lac ….Interesting
  • Cash and equivalent as on 31st March 2020 11.78 cr …anyway company is not earning anything why keeping Borrowing and paying interest… why not use cash to reduce the borrowings?
  • The stock shot up to around 258 in April 2015 when in FY15 company reported some Profit for the First time since 2009. Revenue Rose from 25lac to 2cr around and PAT of 5 lakhs.
  • The Highest PAT Company ever reported since 2009 was 28 lac in FY16 and if I sum up all the PAT since 2009 amount comes as a loss of 1lac.

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Arman Nahar
C.A. who is a USA CFA L3 candidate | Cleared L1 & L2 | Doing independent equity research since 2016 | Screens stocks for investment | Makes in-depth valuation models | Crafts portfolios.
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