Shares of SKM Egg Products on Tuesday touched a new 52-week high of ₹131.90 before closing at ₹119.40, accompanied by a huge trading volume of 1.30 lakh shares, on the NSE. The stock was, however, suspended for trading on the BSE for “penal action.”
Continuous good results Explaining the reasons for the stock hitting fresh 52-week highs on the NSE, where it has raced from a low of ₹5.60 in March this year to a new high of ₹131.90 on Tuesday, the company's MD & CEO Shivkumar said the company’s turnover and profitability were continuously on the rise for the past seven quarters. The reduction in term loan burden has contributed to lower interest cost. Besides, the company’s board had decided in principle on October 31 to foreclose the bank term loan.
This would help in further reduction in the cost of finance. The net worth of the company too had increased significantly.
Suspension & delisting On the reasons for the stock being suspended from trading by the BSE, Shivkumar said: “We had planned to delist our shares from the BSE and had applied for delisting in 2012. However, in deference to the wishes/requests of its investors at its October 31 meeting, the board of directors decided to withdraw the request for delisting. The company has requested BSE to withdraw the suspension.”
The request was under process and he hoped the suspension would be revoked soon. Asked whether the company was in discussion with institutional investors for stake sale, he denied such a move. “We do not have plans for any such move and there is no such need as of now.”
Pledging of shares On what led the company’s promoters to pledge around 12 per cent of the equity with lenders, he said there was ‘no specific reason’ for having pledged a significant portion of his holding in the company. It was done at the request of SBI as collateral security for availing loans.
As earlier, the current fiscal has also been very good for the company with sales and net profit zooming. In the first half of this year, sales stood at ₹129.84 crore compared with ₹105.38 crore in the first half of last year. Net profit zoomed more than three times to ₹9.03 crore (₹2.49 crore).
Exports are key
In the first quarter of 2014-15, the company’s exports accounted for ₹56.67 crore out of the total income of ₹60.26 crore, constituting 94.04 per cent of the sales. In the second quarter exports increased to ₹67.50 crore out of total income of ₹70.63 crore forming 95.57 per cent of the turnover. Exports were mainly to Japan, Europe and West Asia.
Shivkumar said he was looking at exports as a growth opportunity. High consumption of egg yolk powder by European countries and strong demand for egg albumen powder and whole egg powder from Japan and West Asia, offers significant growth opportunities, he added.
The CEO said the company also has plans to expand its operations to other markets, driven by both organic and inorganic growth. The company has one of the largest egg processing plants in Asia with a processing capacity of 1.8 million eggs a day, capable of producing 6,500 tonnes of egg powder annually.