edible palm oil companies sector shares KS Oils Ruchi Soya Sanwaria Agro Gokul Refoils Agro

Dear Visitor,
Crude palm oil is one of the major cooking oil used mostly in Asian countries.
Malaysia and Indonesia are top producing and hence exporting palm oil in the world.
India is one of the palm oil top consuming countries in the world.

Reasons why CPO (Crude Palm Oil) price will rise -

1. Crude palm oil (CPO) prices at Malaysia may rise up to 21% by March 2010 amid fears of output loss in Malaysia, the second largest producer, due to dry weather.
“Given the weakness in the dollar (1.50 against euro), crude oil prices will remain in the range of $70-90 for several months and given the Indian government’s reluctance on non-levy of import duty until April 2010, I believe CPO price must rise to a level between 2,800 - 3,000 ringgit ($830.36-$889.67) by the end of the first quarter of the next calendar year,” said Dorab Mistry, head of vegetable oil trading at Godrej International.

2. Speaking at the Indonesian Palm Oil Conference and Price Outlook 2010 meeting in Bali (Capital of Malaysia), Mistry forecast hot weather to affect Malaysia’s palm yield badly with production falling below 17.5 million tones next year. The two successive falls in output would also indicate an end to high production cycle, he added.

3. Encouraged by low prices, India’s per capita vegetables oil consumption rose by five per cent to 13.5 kg per capita in the oil year November 2008-October 2009.
During the previous oil year, the per capita consumption was 12.86 kg, and during 2007-08, it was 11.4 kg.
Dorab Mistry, director of Godrej international, whose estimates are closely watched by the industry, forecast the country’s per capita vegetables oil consumption wouls continue to rise.

4. It has also been observed that palm oil prices are kept on increasing from last 10 years (year on year basis) due to increase in consumption as India is second largest populated country in world. So going further the consumption is going to increase.

Taking these scenarios into consideration it is expected that palm oil price will increase in future which in turn makes the palm oil producing companies increase their revenues and hence their profit share.

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2. Due to posting of good financial results, there are high probabilities that the stock price may go up before mentioned duration periods so it is recommended to book profits as and when required instead of waiting for mentioned duration period.

Following are few companies related to palm oil manufacturing which are having good fundamentals and are expected to provide good returns in next 4 to 5 years.

Ruchi Soya Industries
Current Price - Rs 106
Market Capital - Rs 2033 crore
PE - 17.98
EPS - 5.93
Expected Returns - 50 to 60%
Holding Duration - 2 to 3 years

Gokul Refolis and Solvent
Current Price - Rs 88.85
Market Capital - Rs 794 crore
PE - 27.33
EPS - 3.24
Expected Returns - 50 to 60%
Holding Duration - 2 to 3 years

Sanwaria Agro Oil
Current Price - Rs 42.9
Market Capital - Rs 1040 crore
PE - 15.54
EPS - 2.76
Expected Returns - 50 to 60%
Holding Duration - 2 to 3 years