Shares of lotus chocolate company has been hitting upper circuit for consecutively 12 sessions in the last month. The stock was trading at 470 on June 24th 2024 and on 2nd August, 2024 the price closed at Rs. 1258 per share.Now the stock is on downward journey after hitting a high of Rs2609.
Currently the stock is trading at Rs.1429.35(close ..16.09.24),which is almost 50 % of its all time high of Rs.2609.
About the company
Lotus chocolate company was incorporated in the year 1988. Mr Prakash Pai and his brother Mr Anant Pai are the promoters of the company.
The company is in the business of manufacturing chocolates and cocoa products products. It’s supplies it’s product all over the world to chocolate makers bakeries and multinational companies.
Products
The main products of the companies are chuckles, choco drops, choco bars, cocoa powder, on and on, liquid chocolate, cocoa mass and Supercar. The company sales it’s products under the brand name Lotus.
Clientele
Some of the well known clients of the company are Mother Dairy food and vegetable Private Limited Parle Products Private Limited Amul
Manufacturing facility
Manufacturing unit at Medak in Andhra Pradesh. This manufacturing unit is an iso 9001-2008 and FSSC certified. This manufacturing unit is near to the cocoa producing region and it processes cocoa beans into cocoa powder and cocoa butter.
The Brand Products.
Chuckles – is the flagship brand of Lotus chocolate company was launched in in early 90s,available in two yummy flavours chocolate and strawberry.
Other products are Superr carr, On & On ,Kajoos, Milky punch, Tango.
Acquisition by Reliance
Reliance consumer products Ltd acquired 51% stake in Lotus chocolate company ltd on May 24th ,2023.Thus Reliance became majority shareholder and took control over the company. Rcpl acquired the company at a consideration of Rs.74 crores.
RCPL also acquired 100 % stake in Soubhagya Confectionary Ltd for Rs.18 crores.
Reliance Consumer Products Ltd is a wholly owned subsidiary of Reliance Retail ventures Ltd.This acquisition by Reliance is a move to step towards its strategy to enter into the FMCG business.
Peer Comparison
| Company | CMP | Mcap Rs.cr | P/E | NP qtr Rs cr | Sales qtr Rs.cr | Mcap to Sales(yrly) |
| Lotus chocolate | 1258.05 | 1615.34 | 167.22 | 10.09 | 124.44 | 3.2 |
| Mrs Bectors | 1394.90 | 8204.45 | 58.21 | 35.43 | 439.40 | 4.67 |
| Bikaji Foods | 739.25 | 18509.50 | 64.48 | 60.55 | 561.40 | 8.24 |
Financials
Market Cap as on 17-08-24=Rs.2500 cr,
cmp=Rs.1947(as on 17-08-24),
| Description | Qtrly mar24(Rs.cr) | Qtrly June 24(Rs. cr) | Chnage |
| Sales | 53 | 124 | +131% |
| PBT | 1 | 11 | +1000% |
Recent Development
The company has informed to the exchange(on 9.08.2024) that they have received the sanction from NCLT for the amalgation of Soubhagya confectionary Pvt Ltd (a wholly owned subsidiary of the company).
Analysis
The stock price has skyrocketed so far and is continuouly moiving up.This has happened after the takeover of Reliance and the company announced the Q1 FY25 result,which was much better than expected.In the annual report it was mentioned that the better performance could be a the effect of considering the data of amalgamated company.
The stock seems expensive at this price considering the current PE of 330. The company was in cash loss in fy23 and after the takeoer of RRVL it turned into profit,which triggered the possitive sentiment for the stock.
The stock price has retraced from its high of Rs.2609 to Rs.1505(close.13.09.2024).
Although the stock has retraced to a great extent still with a PE of 200 it seems expensive.But when we buy such stock we bet on its future prospect,which is why the stock has moved so far.With Reliance’s vision of getting foothold in the fmcg market the future of the stock seems bright .Moreover in the annual report it has been mentioned that the company will be moving into B2C market along with B2B market.Now if it happens and the products of Lotus Chocolate gets the Reliance Retail’network there could be a huge growth prospect.
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