Recently I came across a small cap stock recommendation by Ashish Chugh, well known for his hidden gem stocks. He discussed a small company, Narmada Gelatin. Here are details on why he recommends this small cap stock.
Narmada Gelatin is a 50 years old company from Shaw wallace group and it manufactures Gelatin. It's product, Gelatin is mainly used in food and pharma industry. It is a debt free entity and is available at very attractive stock valuations.
Company had sales of about Rs.91 crore, it was up by 10% in the same period last year. Profit after tax (PAT) was up by about 15% to Rs9.5 crore. Company has a small equity base of Rs.4 crore. EPS for FY11 was Rs 23.50. At the current stock price of Rs 100, the stock trades at PE of 4.25
If you take a look at the balance sheet of the company it shows that Narmada Gelatin is a totally debt free company. Net current assets are close to Rs 26 crore as in FY10. The company has investments of Rs 5.5 crore in mutual funds. After adding profit for FY11 into this, the total current assets and cash swells to around Rs.41 crores. With current assets of about Rs.41 crores, the market cap of this debt free company is at Rs 40 crores. This means the business of a company is available virtually free of cost.
The promoter's holding in this stock is 75%. The recent dividend of Rs.4 puts dividend yield at 4% at current stock price of Rs.100 The book value of the stock is Rs.140
Products of Narmada Gelatin are used in Pharma and food industry (FMCG), that makes it a recession proof business.
Shaw Wallace group has been selling it's many businesses in recent few years. Narmada Gelatin is a good dividend yielding stock with steady growth. If the company is old by Shaw Wallace group, lots of value unlocking would take place.
All in all, it is a good small cap stock to buy, a hidden gem recommended by Ashish Chugh, below Rs.100.
Showing posts with label Ashish Chugh's Hidden Gems. Show all posts
Showing posts with label Ashish Chugh's Hidden Gems. Show all posts
Small cap stock to buy : Agre Developers
Ashish Chugh, author of Hidden Gems, recently talked about two multibagger small cap stocks to buy on CNBC-TV18. Agre Developers is one of the two small cap stocks he recommended.
Below is transcript of his discussion on channel CNBC-TV18 outlining merits of Agre Developers as a "small cap stock to buy".
Agre Developers is a new company which came into existence just about 20-25 days back. It is a Pantaloon group company where there was a scheme arrangement wherein the mall management and mall development business of Pantaloon Retail was demerged and put into a separate company called Agre Developers. Shareholders of Pantaloon Retail were given one share of Rs 10 of Agre Developers for every 20 shares of face value of Rs 2.
As things stand today, the equity of Agre Developers is about Rs 11 crore and the shareholders of Pantaloon Retail became the shareholders of Agre Developers via the scheme of arrangement. The idea behind this demerger was to enable growth of the mall development and mall management business as a separate entity.
The current price is about Rs 48-49, equity of Rs 11 crore which means that the marketcap of the company is about Rs 50-55 crore. So you have a Pantaloon group company available at a marketcap of about 50-55 crore. Now, if you see the financials, for the first six months of the current financial year, the revenues are about Rs 45 crore, the company made a net loss of about Rs 1 crore. With annualized revenues of about Rs 90 crore, the marketcap is just about Rs 55 crore, which is not even one time of revenue.
If you take a look at the balance sheet, the equity is about Rs 11 crore and reserves are close to Rs 250 crore, which means a book value of about Rs 240. As against the book value of Rs 240, you have the stock available at less than Rs 50, which is just about 20% of the book value.
If you see it in totality, they have a debt of about Rs 85 crore on the balance sheet, which means an enterprise value of about Rs 130-140 crore. As against the enterprise value of Rs 140 crore, the company has got a gross block of about Rs 215 crore and also capital work in progress of Rs 40 crore. Out of this gross block of Rs 215 crore, about Rs 80 crore is hard asset in the form of land and building. This is something which gives a lot of comfort as far as the downside in the stock is concerned.
Other small cap stocks discussed recently
They also currently manage about six malls while they have about 24 malls, which will be operational in FY12. In the next one-two years, you can see a massive scalability of operations. Now, this is probably the only listed company involved in mall management business which is a niche business. Being the only listed company and not having any peer group comparison, the valuation, I believe, is just a perception.
From these levels, the downside looks extremely restricted but given the scalability and the management behind it, this could indeed turn to be a real multibagger if held on for maybe three-five years. If you see the shareholding pattern of the company, promoters hold close to 44%. There is a huge amount of institutional holding in the company - institutions hold close to 37% of the company. A lot of these institutional investors may not be interested in a Rs 50-55 crore marketcap company.
It is possible that you may see unloading from some of those institutional investors, which maybe an opportunity for the HNI and retail investors. From these levels, the downside looks extremely restricted. There is scalability, which is going to come in the next couple of years and from these levels, the probability of going wrong in the stock seems to be very little.
Another hidden gem by Ashish Chugh - Fedders Lloyd
Below is transcript of his discussion on channel CNBC-TV18 outlining merits of Agre Developers as a "small cap stock to buy".
Agre Developers is a new company which came into existence just about 20-25 days back. It is a Pantaloon group company where there was a scheme arrangement wherein the mall management and mall development business of Pantaloon Retail was demerged and put into a separate company called Agre Developers. Shareholders of Pantaloon Retail were given one share of Rs 10 of Agre Developers for every 20 shares of face value of Rs 2.
As things stand today, the equity of Agre Developers is about Rs 11 crore and the shareholders of Pantaloon Retail became the shareholders of Agre Developers via the scheme of arrangement. The idea behind this demerger was to enable growth of the mall development and mall management business as a separate entity.
The current price is about Rs 48-49, equity of Rs 11 crore which means that the marketcap of the company is about Rs 50-55 crore. So you have a Pantaloon group company available at a marketcap of about 50-55 crore. Now, if you see the financials, for the first six months of the current financial year, the revenues are about Rs 45 crore, the company made a net loss of about Rs 1 crore. With annualized revenues of about Rs 90 crore, the marketcap is just about Rs 55 crore, which is not even one time of revenue.
If you take a look at the balance sheet, the equity is about Rs 11 crore and reserves are close to Rs 250 crore, which means a book value of about Rs 240. As against the book value of Rs 240, you have the stock available at less than Rs 50, which is just about 20% of the book value.
If you see it in totality, they have a debt of about Rs 85 crore on the balance sheet, which means an enterprise value of about Rs 130-140 crore. As against the enterprise value of Rs 140 crore, the company has got a gross block of about Rs 215 crore and also capital work in progress of Rs 40 crore. Out of this gross block of Rs 215 crore, about Rs 80 crore is hard asset in the form of land and building. This is something which gives a lot of comfort as far as the downside in the stock is concerned.
Other small cap stocks discussed recently
They also currently manage about six malls while they have about 24 malls, which will be operational in FY12. In the next one-two years, you can see a massive scalability of operations. Now, this is probably the only listed company involved in mall management business which is a niche business. Being the only listed company and not having any peer group comparison, the valuation, I believe, is just a perception.
From these levels, the downside looks extremely restricted but given the scalability and the management behind it, this could indeed turn to be a real multibagger if held on for maybe three-five years. If you see the shareholding pattern of the company, promoters hold close to 44%. There is a huge amount of institutional holding in the company - institutions hold close to 37% of the company. A lot of these institutional investors may not be interested in a Rs 50-55 crore marketcap company.
It is possible that you may see unloading from some of those institutional investors, which maybe an opportunity for the HNI and retail investors. From these levels, the downside looks extremely restricted. There is scalability, which is going to come in the next couple of years and from these levels, the probability of going wrong in the stock seems to be very little.
Another hidden gem by Ashish Chugh - Fedders Lloyd
Small Cap Stock To Buy : Fedders Lloyd
Ashish Chugh, author of Hidden Gems, recently talked about two multibagger small cap stocks to buy on CNBC-TV18. Fedders Lloyd is one of the two small cap stocks he recommended.
Below is transcript of his discussion on channel CNBC-TV18 outlining merits of Fedders Lloyd as "small cap stock to buy".
Fedders Lloyd is a Delhi based company which is primarily into three business segments. They are into refrigeration and air-conditioning, engineering and structural steel business and also operate in the power transmission and distribution business. As far as the air-conditioning and refrigeration business is concerned, they provide air-conditioning solutions mainly for commercial establishments. They cater to institutions like railways, mining, defense segments and corporate sector.
In the engineering and steel structural business, they provide turnkey fabrication solutions for large industrial projects. In the power transmission and distribution business they provide EPC solutions for power transmission and distribution projects.
If you look at the financials of the company, FY10 sales were close to Rs 700 crore which were up by 50% compared to FY09. Profit after tax (PAT) was about Rs 40 crore, up from about Rs 11 crore which the company did in FY09. The financial year for this company is from July to June. In Q1 ended September of 2010, they have done sales of close to Rs 190 crore, up by about 18% over the same period last year. Profit after tax was about Rs 11.5 crore, up by about 35%.
EPS on trailing 12 months basis is close to Rs 15 which means at a current price of about Rs 75-76 the stock is traded at a P/E multiple of just about 5-5.5. If you compare this company with their peer group namely Blue Star and Voltas Ltd, you find a significant undervaluation to the peer group. Voltas and Blue Star, both command a P/E of close to 18-20 times and they have a marketcap of about 1.5 times of their sales.
Other small cap stocks discussed recently
The major concern about this company is the low dividend payout. Even though this company makes an earning of about Rs 15, this company pays only Re 1 dividend to the shareholders. That is a bit of a concern. The rerating for the stock could be on account of increased investor friendliness of the company. If they are able to sustain its earnings and grow at the same pace for which it has been growing for the past couple of quarters, I think we could see a rerating of the stock.
Another hidden gem by Ashish Chugh - Agre developers
Below is transcript of his discussion on channel CNBC-TV18 outlining merits of Fedders Lloyd as "small cap stock to buy".
Fedders Lloyd is a Delhi based company which is primarily into three business segments. They are into refrigeration and air-conditioning, engineering and structural steel business and also operate in the power transmission and distribution business. As far as the air-conditioning and refrigeration business is concerned, they provide air-conditioning solutions mainly for commercial establishments. They cater to institutions like railways, mining, defense segments and corporate sector.
In the engineering and steel structural business, they provide turnkey fabrication solutions for large industrial projects. In the power transmission and distribution business they provide EPC solutions for power transmission and distribution projects.
If you look at the financials of the company, FY10 sales were close to Rs 700 crore which were up by 50% compared to FY09. Profit after tax (PAT) was about Rs 40 crore, up from about Rs 11 crore which the company did in FY09. The financial year for this company is from July to June. In Q1 ended September of 2010, they have done sales of close to Rs 190 crore, up by about 18% over the same period last year. Profit after tax was about Rs 11.5 crore, up by about 35%.
EPS on trailing 12 months basis is close to Rs 15 which means at a current price of about Rs 75-76 the stock is traded at a P/E multiple of just about 5-5.5. If you compare this company with their peer group namely Blue Star and Voltas Ltd, you find a significant undervaluation to the peer group. Voltas and Blue Star, both command a P/E of close to 18-20 times and they have a marketcap of about 1.5 times of their sales.
Other small cap stocks discussed recently
In the case of Fedders Lloyd, this company trades at a P/E multiple of about 5-5.5 and as a marketcap to sales of just about 0.35. The marketcap of this company is just about Rs 235 crore and does sales of around Rs 700-750 crore. If you see the balance sheet, this company is asset rich. Out of the total gross block of about Rs 150 crore, they have a freehold land of about Rs 38 crore, a five acre plot which is located at a prime place in South Delhi which maybe very valuable as of now. The main trigger for rerating of Fedders Lloyd is not going to be the property but it is going to be sustainability of earnings.
The major concern about this company is the low dividend payout. Even though this company makes an earning of about Rs 15, this company pays only Re 1 dividend to the shareholders. That is a bit of a concern. The rerating for the stock could be on account of increased investor friendliness of the company. If they are able to sustain its earnings and grow at the same pace for which it has been growing for the past couple of quarters, I think we could see a rerating of the stock.
Another hidden gem by Ashish Chugh - Agre developers
Small cap stock to buy - Acrysil India
Checkout a new small cap stock to buy, Acrysil India, recommended by Ashish Chugh, investment analyst and author of Hidden Gems. He has recently appeared on CNBC TV-18 interview and unearthed his two hidden gem small cap stocks for investors.
He has advised investors to buy stock for long-term investment portfolio.
Acrysil India is a very small company, which has created a niche for itself in the product which it manufactures. This company manufactures granite and quartz kitchen sinks, which no other company manufactures in India. It has got a virtual monopoly in the granite and quartz kitchen sink. The products of this company has sold under Carysil brand name and that brand is basically become a premium brand for kitchen sinks.
Checkout entire verbatim transcript of his interview published on Moneycontrol here.
Checkout another small cap stock recommended by Ashish Chugh: Cosmo Films
Checkout earlier Hidden Gems by Ashish Chugh
He has advised investors to buy stock for long-term investment portfolio.
Acrysil India is a very small company, which has created a niche for itself in the product which it manufactures. This company manufactures granite and quartz kitchen sinks, which no other company manufactures in India. It has got a virtual monopoly in the granite and quartz kitchen sink. The products of this company has sold under Carysil brand name and that brand is basically become a premium brand for kitchen sinks.
Checkout entire verbatim transcript of his interview published on Moneycontrol here.
Checkout another small cap stock recommended by Ashish Chugh: Cosmo Films
Checkout earlier Hidden Gems by Ashish Chugh
Small cap stock to buy - Cosmo Films
Checkout another small cap stock to buy, Cosmo Films, recommended by Ashish Chugh, investment analyst and author of Hidden Gems. He has recently appeared on CNBC TV-18 interview and unearthed his two hidden gem small cap stocks for investors.
He has advised investors to buy stock for long-term investment portfolio.
Cosmo Films is a company which manufacturers Bi-axially Oriented Polypropylene Films (BOPP) films and also thermal insulation film. In the thermal insulation film segment this company is the largest player. This company has got two manufacturing plants in Aurangabad, two in Gujarat and besides this the company has got overseas manufacturing facilities in Korea, US and Netherlands.
Checkout the entire verbatim transcript of his interview published on Moneycontrol here.
Checkout another small cap stock to buy recommended by Ashish Chugh: Acrysil India
Checkout earlier Hidden Gems by Ashish Chugh
He has advised investors to buy stock for long-term investment portfolio.
Cosmo Films is a company which manufacturers Bi-axially Oriented Polypropylene Films (BOPP) films and also thermal insulation film. In the thermal insulation film segment this company is the largest player. This company has got two manufacturing plants in Aurangabad, two in Gujarat and besides this the company has got overseas manufacturing facilities in Korea, US and Netherlands.
Checkout the entire verbatim transcript of his interview published on Moneycontrol here.
Checkout another small cap stock to buy recommended by Ashish Chugh: Acrysil India
Checkout earlier Hidden Gems by Ashish Chugh
Hidden Gems - Stocks To Buy In June
Here are two small cap stocks to buy in June, discussed by Ashish Chugh, author of Hidden Gems. These two small cap stocks have good potential to fetch very good returns for investor in medium term.
Tata Metaliks - Small Cap High Dividend Stock To Buy
Tata Metaliks is a part of Tata Group and this has got two manufacturing plants. One is located in West Bengal and the other one is at Redi in Maharashtra. The total capacity is about 6.5 lakh tonne of pig iron and the company claims to be the world’s largest producer of pig iron.
Small Cap Stock To Buy - IVP Limited
This is one of the small cap stock to buy in June, as discussed by Ashish Chugh, author of Hidden Gems. was the first large scale Indian venture that offered the latest technology to the Foundry Industry in India.
Also Checkout:
Stocks To Buy Now - Hidden Gems By Ashish Chugh
Small Cap Stocks To Buy - Hidden Gems From Ashish Chugh
Tata Metaliks - Small Cap High Dividend Stock To Buy
Tata Metaliks is a part of Tata Group and this has got two manufacturing plants. One is located in West Bengal and the other one is at Redi in Maharashtra. The total capacity is about 6.5 lakh tonne of pig iron and the company claims to be the world’s largest producer of pig iron.
Small Cap Stock To Buy - IVP Limited
This is one of the small cap stock to buy in June, as discussed by Ashish Chugh, author of Hidden Gems. was the first large scale Indian venture that offered the latest technology to the Foundry Industry in India.
Also Checkout:
Stocks To Buy Now - Hidden Gems By Ashish Chugh
Small Cap Stocks To Buy - Hidden Gems From Ashish Chugh
Stocks To Buy Now - Hidden Gems By Ashish Chugh
Ashish Chugh, Author of Hidden Gems, has recommended to buy stocks of two below mentioned companies which he feels are relatively unknown and unexplored in stock markets and have potential to fetch good returns on medium term stock investments.
Anik Industries - A Hidden Gem By Ashish Chugh
Anik Industries is a part of Ruchi Soya Group. This company manufactures Anik brand of ghee and dairy whitener. The company has got primarily two business segments. One is the dairy business and the second is the trading business. Besides that the company also has a small wind power generation capacity, which accounts for marginal revenues for the company.
Stocks To Buy Now - Siyaram Silk Mills
Siyaram Silk Mills is a part of Siyaram Poddar group. This is a vertically integrated textile company. This company has got in-house facilities for spinning, dyeing, weaving, finishing and also garmenting. The brand Siyaram is available at over 40,000 retail outlets all across the country. Besides that the company is also opening its own exclusive stores where it will sell Siyaram besides other brands, which the company has. Beside Siyaram the company also has Oxemberg and J Hamstead as the other brands under which their garments are sold.
Anik Industries - A Hidden Gem By Ashish Chugh
Anik Industries is a part of Ruchi Soya Group. This company manufactures Anik brand of ghee and dairy whitener. The company has got primarily two business segments. One is the dairy business and the second is the trading business. Besides that the company also has a small wind power generation capacity, which accounts for marginal revenues for the company.
Stocks To Buy Now - Siyaram Silk Mills
Siyaram Silk Mills is a part of Siyaram Poddar group. This is a vertically integrated textile company. This company has got in-house facilities for spinning, dyeing, weaving, finishing and also garmenting. The brand Siyaram is available at over 40,000 retail outlets all across the country. Besides that the company is also opening its own exclusive stores where it will sell Siyaram besides other brands, which the company has. Beside Siyaram the company also has Oxemberg and J Hamstead as the other brands under which their garments are sold.
Anik Industries - A Hidden Gem By Ashish Chugh
Ashish Chugh, Author of Hidden Gems, has recommended to buy stocks of this dairy business pick for medium term stock investment. Checkout the analysis.
Anik Industries is a part of Ruchi Soya Group. This company manufactures Anik brand of ghee and dairy whitener. The company has got primarily two business segments. One is the dairy business and the second is the trading business. Besides that the company also has a small wind power generation capacity, which accounts for marginal revenues for the company. In dairy business, this company has got infrastructure facilities at Uttar Pradesh (UP) and Madhya Pradesh (MP). Besides that company also has infrastructure of chilling units spread across these two states. The company is putting up a new plant, which will process about 4 lakh litres of milk every day and produce 30 tonne of milk powder.
Anik as a brand, whether it is ghee or skimmed milk powder, it is an established brand in the Indian market with a good brand recall. The company also derives revenues from trading of agricultural and non-agricultural commodities.
If you look at the financials of the company FY09 sales were close to Rs 1000 crore, profit after tax was about Rs 11 crore and for the first nine months sales are up by about 25% and profit after tax is down by about 12% to about Rs 10 crore.
If you look at the positives and negatives of the company—the company has got good brand recall. The potential for growth in this business is immense. Another important thing that has happened in the international markets is that Chicago Mercantile Exchange has recently allowed derivative trading in skimmed milk powder. Now that essentially is going to do is that there is going to be a speculative interest also in skimmed milk powder. This may lead to the prices of the skimmed milk powder going up in the international markets, which will be a big benefit to companies involved in the manufacture of skimmed milk powder especially Anik Industries. It has got a large capacity for the manufacture of skimmed milk powder.
On the lower side the concerns for the company are that the operating margins of the company are very small. The performance of the company is largely depended upon its ability to procure so much amount of milk at competitive prices. But given the capabilities of the promoter and the fact that the price is attractive the stock currently trades at about Rs 60 and market cap of about Rs 150-160 crore.
For a company with established brand doing a turnover close to Rs 1200 crore the valuation of the company looks very attractive. Skimmed milk powder prices if they go up can really lead to margin improvement for the company. I think from these levels downside the stock looks restricted and the potential upside could be good.
Go back to: Stocks To Buy Now - Hidden Gems By Ashish Chugh
Anik Industries is a part of Ruchi Soya Group. This company manufactures Anik brand of ghee and dairy whitener. The company has got primarily two business segments. One is the dairy business and the second is the trading business. Besides that the company also has a small wind power generation capacity, which accounts for marginal revenues for the company. In dairy business, this company has got infrastructure facilities at Uttar Pradesh (UP) and Madhya Pradesh (MP). Besides that company also has infrastructure of chilling units spread across these two states. The company is putting up a new plant, which will process about 4 lakh litres of milk every day and produce 30 tonne of milk powder.
Anik as a brand, whether it is ghee or skimmed milk powder, it is an established brand in the Indian market with a good brand recall. The company also derives revenues from trading of agricultural and non-agricultural commodities.
If you look at the financials of the company FY09 sales were close to Rs 1000 crore, profit after tax was about Rs 11 crore and for the first nine months sales are up by about 25% and profit after tax is down by about 12% to about Rs 10 crore.
If you look at the positives and negatives of the company—the company has got good brand recall. The potential for growth in this business is immense. Another important thing that has happened in the international markets is that Chicago Mercantile Exchange has recently allowed derivative trading in skimmed milk powder. Now that essentially is going to do is that there is going to be a speculative interest also in skimmed milk powder. This may lead to the prices of the skimmed milk powder going up in the international markets, which will be a big benefit to companies involved in the manufacture of skimmed milk powder especially Anik Industries. It has got a large capacity for the manufacture of skimmed milk powder.
On the lower side the concerns for the company are that the operating margins of the company are very small. The performance of the company is largely depended upon its ability to procure so much amount of milk at competitive prices. But given the capabilities of the promoter and the fact that the price is attractive the stock currently trades at about Rs 60 and market cap of about Rs 150-160 crore.
For a company with established brand doing a turnover close to Rs 1200 crore the valuation of the company looks very attractive. Skimmed milk powder prices if they go up can really lead to margin improvement for the company. I think from these levels downside the stock looks restricted and the potential upside could be good.
Go back to: Stocks To Buy Now - Hidden Gems By Ashish Chugh
Stocks To Buy Now - Siyaram Silk Mills
Ashish Chugh, Author of Hidden Gems, has recommended to buy stocks of this textile sector pick for medium term stock investment. Checkout the analysis.
Siyaram Silk Mills is a part of Siyaram Poddar group. This is a vertically integrated textile company. This company has got in-house facilities for spinning, dyeing, weaving, finishing and also garmenting. The brand Siyaram is available at over 40,000 retail outlets all across the country. Besides that the company is also opening its own exclusive stores where it will sell Siyaram besides other brands, which the company has. Beside Siyaram the company also has Oxemberg and J Hamstead as the other brands under which their garments are sold.
If you see the financials of the company, for FY09, the company did sales of about Rs 530 crore, profit after tax (PAT) was about Rs 11.5 crore. In the first nine months, sales are up by about 25% about Rs 472 crore. Profit after tax is up by more than 150% to about Rs 18.5 crore, which means an annualized EPS of Rs 25. The stock currently trading at about Rs 170-172 is available at a PE multiple of less than 7 and a market cap of about Rs 160 crore.
If you look at the valuation of the company—you have a company, which is doing sales of close to Rs 600-650 crore that too in the branded segment available at a market cap of about Rs 160 crore and a PE of less than 7.
The company has got a 20 year track record of uninterrupted dividends. Even for 2010 the company has already given an interim dividend of about 60%. The book value is about Rs 175 which means bonus is definitely a possibility. The best part is that past few years there has been no equity dilution by the company except for the bonus, which the company gave in 2006 and a small preferential issue, which was made to the promoter’s way back in 2001. Besides that there has not been any equity dilution and the equity is very small at about Rs 9.5 crore.
Given all those factors, the price to earning multiple of 7 is the company is currently discounting the PE multiple of a commodity textile play and not really of value added company with good brands. The stock is bound to get re-rated. I think it is a matter of time that the stock gets re-rated.
Source: Transcript of Ashish Chugh's interview on CNBC TV18.
Go back to: Stocks To Buy Now - Hidden Gems By Ashish Chugh
Siyaram Silk Mills is a part of Siyaram Poddar group. This is a vertically integrated textile company. This company has got in-house facilities for spinning, dyeing, weaving, finishing and also garmenting. The brand Siyaram is available at over 40,000 retail outlets all across the country. Besides that the company is also opening its own exclusive stores where it will sell Siyaram besides other brands, which the company has. Beside Siyaram the company also has Oxemberg and J Hamstead as the other brands under which their garments are sold.
If you see the financials of the company, for FY09, the company did sales of about Rs 530 crore, profit after tax (PAT) was about Rs 11.5 crore. In the first nine months, sales are up by about 25% about Rs 472 crore. Profit after tax is up by more than 150% to about Rs 18.5 crore, which means an annualized EPS of Rs 25. The stock currently trading at about Rs 170-172 is available at a PE multiple of less than 7 and a market cap of about Rs 160 crore.
If you look at the valuation of the company—you have a company, which is doing sales of close to Rs 600-650 crore that too in the branded segment available at a market cap of about Rs 160 crore and a PE of less than 7.
The company has got a 20 year track record of uninterrupted dividends. Even for 2010 the company has already given an interim dividend of about 60%. The book value is about Rs 175 which means bonus is definitely a possibility. The best part is that past few years there has been no equity dilution by the company except for the bonus, which the company gave in 2006 and a small preferential issue, which was made to the promoter’s way back in 2001. Besides that there has not been any equity dilution and the equity is very small at about Rs 9.5 crore.
Given all those factors, the price to earning multiple of 7 is the company is currently discounting the PE multiple of a commodity textile play and not really of value added company with good brands. The stock is bound to get re-rated. I think it is a matter of time that the stock gets re-rated.
Source: Transcript of Ashish Chugh's interview on CNBC TV18.
Go back to: Stocks To Buy Now - Hidden Gems By Ashish Chugh
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