Thursday, February 22, 2007

Buy Carnationa Nutra- Analogue Foods Ltd.

Carnationa Nutra- Analogue Foods Ltd.

CMP - Rs. 85

BSE Code -531335

one year Target 165

With changing lifestyle patterns and healthier foods gaining greater acceptability, Carnation Nutra, with Cadila Group now in the drivers seat, gets set to do to "Nutralite" what Cadila did to "Sugar Free".

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

Carnation manufactures Nutralite brand of table Margarine. Margirine is a healthier alternative to butter and is made from refined vegetable oils and skimmed milk. Nutralite is the largest selling margarine in India with a market share of 60%.

The marketing of Nutralite is being handled by the Consumer Product Division of Cadila - which also handled Sugar Free and is credited with making Sugar Free, the largest selling Low Calorie Sugar substitute. Infact, Sugar Free commands a market share of 75% in Low Calorie Sugar substitute category. Cadila group has already initiated aggressive marketing campaign of Nutralite which include advertising on various Television Channels and distribution of samples of Nutralite free with packs of Sugar Free.


Conclusion

In the West, consumption of Margarine is 3 times that of Butter. In India, it is just a very small fraction of sales of butter. There is thus a Huge unexplored potential for the product. Given the changing lifestyle patterns - growing affluence and sedentary lifestyles is leading to a lot of health risks like obesity, cardio vascular diseases and Diabetes. In such a scenario, products like Sugar Free and Nutralite have been gaining greater acceptability. So, we believe the time is just right for such products to start a phase of high growth.

The stock has all ingredients to go a long way - the company sells a product which currently has the largest market share & is still to enter the growth phase; a good management capable of scaling up operations considerably to meet the demand; a small Equity Capital & high promoter's stake.

We believe Nutralite is still in the Introduction or the Evolution stage of the product life cycle and is still to enter its growth phase. The market for Margirine which is extremely small when compared to butter may register exponential growth in the years to come. And with Cadila now in the drivers seat, Nutralite may be a repeat of what Cadila did to Sugar Free.

Posted by Ayush Jain at Thursday, February 22, 2007

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