NARMADA GELATINES LIMITED (526739) - STOCK OF THE WEEK

Today I am expressing my view on one Specialty Chemical stock.

NARMADA GELATINES LIMITED (526739)

Narmada Gelatines Ltd. (Erstwhile Shaw Wallace Gelatines Ltd) was set up in 1961. The company is strategically located in the Central Indian State of Madhya Pradesh and has convenient access to its main and essential inputs of crushed bones, acid, lime and good quality water.

Narmada Gelatines Ltd., has pioneered the manufacture of ossein and gelatin in India and is today a frontrunner in India's Gelatine Industry meeting exacting standards of various users worldwide.

ABOUT GELATINE

Gelatine is one of the most versatile biological products with a wide range of physical and chemical properties. It is a natural animal protein composed of various essential amino acids required for human nutrition.

Gelatine is derived from the selective hydrolysis and extraction of protein collagen found mainly in the connective tissues of animals.

Collagen is the principal organic component of animal bones. In India bovine bones, are the conventional raw materials used in gelatine manufacture. The formation of water soluble gelatine may be regarded as hydration and hydrolysis of collagen. Gelatine molecules represent various sized units, each a fragment of the collagenous chain.

COMPANY PRODUCTS

Narmada Gelatines manufactures mainly 4 grades of Gelatines.

1. Pharmaceutical

2. Edible

3. Industrial

4. Photographic

1. Pharmaceutical

Gelatine is virtually indispensible in the Medical and Pharmaceutical field and is specifically processed for extensive use in hard capsules, soft capsules, micro capsules, tablets and other coating applications.

A unique process has also been developed to provide gelatine suitable for use in the manufacture of intravenous plasma extenders. Its application as blood substitute infusions during extreme life risk situations is invaluable. The gelatine used in these are made so that its decomposition after administration takes place completely without leaving any residue and without imposing strain on any particular human organ.

2. Edible

Gelatine is very extensively used in the edible preparations the world over. It offers the following unique and unrivaled set of excellent characteristics.

* Gelatine is a very easily digestible protein.

* Gelatine is a pure and natural food protein 

* Gelatine containing most of the amino acids essential for human nutrition.

* Gelatine is added to other foods to increase the protein content.

* Gelatine is food product in its own right, is absolutely safe for human                consumption.

3. Industrial

The manufacture of several coated and bonded abrasives including industrial grinding wheels use gelatines specially made suitable for high bonding of silicon carbide and aluminium oxide grains.

Other extensive applications include use in the manufacture of extra hard printer rollers, cork compositions and water dispersible pesticides. We also manufacture protein colloids for defence usage for making ball powder.

4. Photographic

Gelatine is extensively used in photography. Gelatine is more than just a bonding agent for the light-sensitive silver salts and together with these, it forms the photographically active emulsion. This is probably the most important factor in the use of gelatine for photography. At Narmada Gelatines Ltd, ensure that the manufacturer gets the best clarity & sharpness of image on his films and X-ray rolls.

In the dark room the gelatine allows chemical substances that are necessary for photographic developing to penetrate sufficiently into the emulsion, and in a similar way it allows these solutions to be washed away after developing.

PRODUCTION FACILITY

Production facility involves following process.

 EXTRACTION

Gelatine is extracted after acidulation, Maturation & Washing. It is extracted in stages. The initial extracts are obtained at low temperatures and have the highest gel strengths. Subsequent extracts are made in stages of higher temperatures. The process technology perfected by the company ensures complete and total extraction of the gelatine.

PURIFICATION
The Gelatine solution obtained from the extraction process is subjected to intense filtration and ion exchange. This ensures effective removal of physical and chemical impurities.
DRYING
The concentrated gelatine solution is solidified and a continuous flow of jelly noodles are produced. These noodles are evenly spread on a continuous band drier. The drying operation is systematically controlled with filtered, washed, pre-dried and sterilised air. The dry gelatine is mechanically reduced into uniformly granular sizes.

GRINDING, SIFTING & MIXING

Depending upon the end use requirement and specification the dry gelatines are transformed into consistent despatchable material. Various high speed mills and large capacity blenders are used depending on specific requirements at this stage

Company website : Clickhere

Company shares are trading in BSE. Promoter holding in company 75 %.

Company posted 28.5 Cr top line in Dec qtr.

Operating Margin 3.9 % 

Net profit is 0.65 Cr in the Dec qtr.

Stock is trading  low PE 19  as compared to industry PE.

Dividend (%) last year 40 %

Debit free company.

Book value of the stock Rs180.

Stock is trading at Rs 130.

Stock is trading below its Book value. Company products are mainly multipurpose like pharma,edible , industrial etc. As the related sectors are growing fast and more and more edible grade products are produced from gelatines like Jelly toffees etc which is gaining market significantly. Above all are positive for the stock.This stock will give good returns to the investors in near future.

NOTE : THE ABOVE IS NOT A RESEARCH REPORT NOR A RECOMMENDATION  BUT INFORMATION AS AVAILABLE ON PUBLIC DOMAIN. 

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”