First it was on Christmas Eve with a higher guidance, and today Amira Nature Foods (NYSE:ANFI) left another present for shareholders with the announcement of a $90 million contract for its branded basmati rice to one of its repeat customers. To be honest, I would have preferred it was to a new customer, but $90 million is great for a company less than $550 million last fiscal year. Chairman Karan A. Chanana stated, "As we enter into 2015, we look forward to executing on our additional opportunities for growth with both our Amira branded products and our third party branded products throughout the world." That sounds promising as perhaps new customers and new market contracts will be announced next year.
On Dec. 24, ANFI raised its sales growth guidance for fiscal 2015 from "more than 20%" to "more than 25%." I stated in my update article at the time,
"Other than the short explanation stating the gains were "driven by ongoing distribution gains and market expansion across India and our international markets," no further details were provided by ANFI. Perhaps in a classic case of saying less is more the market obviously loved the matter-of-fact simple tone of raised guidance as evidenced by the stock price move."
My question is this: Was the $90 million contract already anticipated and factored into the guidance? If so, the new contract isn't as strong of news as it appears, although a bird in the hand is still worth more than in the bush, and should add confidence either way of ANFI meeting or exceeding its 25% growth target. I continue to believe ANFI is as simple a business yet undervalued a stock as you can get.
Disclosure: The author is long ANFI.
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