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Friday, June 20, 2008

Carnation Nutra Analogue Foods: Make your portfolio healthy

ScripScan:Carnation Nutra Analogue Foods
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[Carnation Nutra Analogue Foods news,views and analysis/owner of nutralite brand/results/future prospects/acquired by cadilla/Analsyt buy call/cheap and attractive valuations/Solid fundamentals/great buy/Target price/What should be done with carnation nutra]


Background:Carnation Nutra is a company belonging to the Cadila Group. Cadila Group acquired the compny and thereafter came out with an open offer in the month of May 06at a price of Rs.150 per share.Cadila group currently owns 61% equity in the company.

Introduction:Carnation Nutra Analogue Foods is a manufacturer of table margarine, which sells under the brand Nutralite.Nutralite is the largest selling margarine in India with a market share of 60%.Margirine is made from refined vegetable oils and is priced comparatively cheaper to butter.Hence,making it an attractive option for general masses.Further,Nutralite can replace butter in all applications and can be used for cooking, baking, frying, and as a spread on bread, toasts, biscuits etc. Hence, there are tremendous growth prospects for the product. Carnation is targeting urban health conscious middle class segment. The company is also operating in regular diary products like butter, processed cheese & pizza cheese.As of today the margarine market is very small in India and whatever growth has achieved by the company is with zero advertising.Now the company has started aggressive marketing campaign of Nutralite including advertising on various Television Channels and distribution of samples of Nutralite free with packs of Sugar Free.

Outlook:The company has a nation-wide presence & has the second largest market share in up-markets of Maharashtra, Delhi & Gujarat after Amul.As the health awareness among Indian populace is at a never before high, the product has also shown extreme consumer interest which is only expected to increase from here.It has a strong distribution across India with several distributors.Carnation is also considering exports aimed at Middle East & African nations.

Conclusion:The market for Margirine is extremely tiny compared to butter and that will help it to register exponential growth in the years to come.The company is a debt-free entity.Carnation nutra has shown strong consitency in its topline and bottomline over the last many years.The management is aiming for a more than 80% bottomline jump in the current fiscal.The company is expected to continue with its robust growth in the coming years.Valuations at the current level looks cheap with a forward 09 P/E ratio of around 6.5.Everbody is aware of the cadila"s product "Sugar free",there is every reason cadila with its brand building experience can set the same stage for nutralite. So considering at the solid pedigree,bright prospects,huge growth,booming industry,ambitious initiatives,export potential,CARNATION NUTRA MAY JUST PROVE TO BE THE NEXT BIG THING.

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