ABSTRACT
On December 15, 2019, Neha Gupta was deep in her thoughts, staring at a spreadsheet on her laptop screen. Neha was the Senior Partner at Investors’ Paradise, a private equity firm based out of Delhi, the capital city of India. Investors’ Paradise focused on investment opportunities in unlisted firms with significant growth potential and listed entities with substantial growth runway. Neha was in charge of the Private Investment in Public Equity (PIPE) portfolio at Investors’ Paradise. She was evaluating Apex Frozen Food Ltd, a listed firm in the aquaculture business. Apex was about to commission a large production facility that would reduce its dependence on a leased production facility and would allow it to change its product mix, favouring high-margin ready-to-eat shrimps. It would result in substantial improvement in profit margin. The sharp dip in shrimp prices in the USA and Europe and delay in commissioning of the new shrimp facility had resulted in a sharp drop in stock prices of Indian aquaculture stocks (see Exhibit 27.1). However, Neha believed that the stock price dip was an opportunity to invest in Apex as the firm was adding capacity and mitigating risk by investing in backward integration. Market Performance of Listed Select Aquaculture Firms in India
|
https://s3-euw1-ap-pe-df-pch-content-public-p.s3.eu-west-1.amazonaws.com/9781032724478/352c1548-c297-4013-a634-d94554e539a9/content/exhibit27_1_B.tif" xmlns:xlink="https://www.w3.org/1999/xlink"> A triple line graph plots the rough ride for aquaculture stocks. The curve for Apex Frozen Food starts at (1, 100) and decreases to (25, 45). The curve for Avanti Feeds starts at (1, 100) and decreases to (25, 55). The curve for Waterbase starts at (1, 100) and decreases to (25, 60). All data are approximate. |
