Gufic BioSciences – Stock Analysis

Gufic BioSciences stock has delivered 20x returns in the last 5 years. This multibagger stock is on the radar of many investors and is a common name in high growth screens. The stock has corrected by ~47% in the last one year. However, in the same period the revenues and profits have consistently grown. Does the recent correction offer a good chance to invest in the stock for the long term?

Gufic BioSciences Business

The company was established in 1970. It has a presence in the pharmaceutical space with it’s products ranging from API’s to bulkdrugs and personal care products. The company is also into the business of contract manufacturing.

The promoter holding has reduced from 69.98% in Q2FY18 to 65.75% in Q3FY19.

Gufic Biosciences Revenue

Revenue Breakup

The share of consumer business has gone down to zero while the formulations (pharma) business’s share rose to > 90%.

Financial Snapshot

Gufic BioSciences Financial Data

Financial Snapshot

  • The company has consistently grown it’s revenues in double digits for the last 10 years.
  • The net profit margins have increased from 2.1% to 5.56%.
  • The fixed-asset turnover has risen from just 3.21 to 13.48! This is a meteoric rise. However, the total asset turnover has increased from 1.05 to just 1.27.
  • Although profitable, the company has reported negative operating cash flows for the last 3 years. Over the last 10 years, the company has earned a profit of Rs 49.16 Crores but the operating cash flows were just Rs 29.11 Crores.

The working capital requirement has become heavier over the years. The WC-to-Revenue ratio stood at 36.1% in FY18. The inventory days have grown to 114 from < 80 till a few years back. The debtors as per FY18 financials were Rs 81 Crores. This figure is nearly 5 times the FY18 profit after tax.

Red Flags

The company’s debtors are given a credit period of 30-90 days as per the management’s comments. However, the receivables due beyond the due dates are very high.

Gufic BioSciences Ageing

From Annual Report of FY18

The receivables due for more than 90 days after the credit period is ~ Rs 16 Crores, which is almost 87% of the FY18 profits. However, the company has just created a provision for Rs 5.85 Crores on the basis of “Due after 6 months of due date”.

Gulfic BioSciences provisions

Under reporting of provisions

The above image is from the Auditor’s Report in the 2018 Annual Report. One has to be careful as the management might be under-reporting the bad debt. The auditors have also flagged off the lack of internal controls in the review of receivables and recoverables.

Weak Internal Controls

Auditor’s Qualification

There are also a lot of related party transactions. The promoter group has interest in many companies which use the name Gufic. Infact, one of the private companies has the name Gufic BioSciences Private Limited. Almost 14% of sales and 10% of purchases are made with Related Parties. Are the promoters running similar businesses using the Gulfic BioScience brand name?

Further, we do not understand the exponential growth in revenues without any material change in the net fixed assets. Gufic BioScience has a fixed asset turnover ratio that would put other pharma companies to shame.

The above chart shows the Fixed Asset to Turnover ratio of mid-size bulk drug makers. Gufic BioScience has a ratio which is way beyond the industry average.

Conclusion

Avoid – Irrespective of growth and valuations.


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Cheviot Company – Stock Analysis

We recently came across Cheviot Company in our smallcap radar. The company’s promoters are the Kolkata based Kanoria family who hold a 74.99% stake in the company. The family has varied business interests in the tea, jute and leather sectors.

Cheviot Company Business

Cheviot Company is primarily in the business of Jute. The company has 2 plants which are located in the 24 Parganas (South) district of West Bengal. Under Jute Packaging Materials Act of 1987, it is compulsory to use 100% jute bags (before November 2018, this was 90%) for packing food grains of consignment size of 10-100 KGs and 20% of jute bags for packing sugar consignments of 25-100 KGs.

Exports contribute ~ 35.5% of the revenues as per FY18 numbers. The export revenues are stagnant since FY12, thus the % share of revenue from exports is going down. Jute sacks have low margins while hessian fabrics and jute shopping bags have higher margins.

Financials

The raw prices of jute affect the prices of finished jute products and thus affects the top-line of the company.

Cheviot Company Financials

5 Year Financial Snapshot

The company’s EBITDA margins are stable and at par with other well run jute companies. Also, the company derives significant other income from it’s investments. In small companies with high promoter holding, we need to look at the remuneration of the directors with respect to the profits and the employee expenses of the company.

Cheviot Company Remuneration

Director’s Remuneration Table

The remuneration spike in FY18 is because of the remuneration being paid to Utkarsh Kanoria. He is the promoter’s son and was appointed as a director in the company in FY18.

Statistical Bargain?

Rs 290 Crores worth of investments

For a company with a market capitalization of Rs 455 Crores, you get net investments worth Rs 290 Crores. That means, you are paying Rs 164 Crores for the core jute business. This business generated a Profit before tax of Rs 50 Crores in FY18. This basically means that the core business is available at a PE of ~ 5. However, considering the slow growth rate and cyclicality of the jute business the PE would be in single digits.

Also, the current Price-to-Book ratio of the company is 0.87. Our view is that the stock trades at a fair value. Moreover, considering the slow growth rates, the stock would not command premium valuations. If we could get the stock for 20% to 25% lower than the current price, we could call it a statistical bargain. Investors can have the stock on their watchlist.

 


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IOL Chemicals Stock Note

IOL Chemicals and Pharmaceuticals Limited

IOL Chemicals was established in 1986. It is headed by Varinder Gupta (Chairman and MD) and Vijay Garg (JMD). Rajinder Gupta, one of the co-founders in 1986 is now the promoter of Trident Ltd. The company derives it’s revenues majorly from Ibuprofen API and Ethlyn Acetate. In FY18, bulk drugs contributed 63% of the revenues, while in FY17 this share was 56%. IOL Chemical has a presence in more than 50 countries across the globe.

Notes

Ibuprofene is a drug that is used to treat pain. BASF’s Texas unit which had a 5000 TPA Ibuprofene API capacity was shut down in June due to technical reasons. Ibuprofene API has an annual demand of ~ 35,000 TPA globally. However, even before BASF’s unit shut down, the Ibuprofene API supply chain was facing issues due to problems in India and then in China.

  • The 3 major Ibuprofene API makers in China. In India, Granules, Solara and IOL Chemicals are the key players.
  • IOL Chemicals has increased capacity from 7,200 TPA to 10,000 TPA in August 2018.
  • The plant is running on 100% capacity due to global supply-side constraints.
  • The domestic demand (India) for Ibuprofene API is ~ 5,000 TPA. IOC Chemicals exports 50% of it’s production.

The price of Ibuprofene API is rising up due to supply-side issues. Now, the drug’s prices are regulated and thus the already wafer-thin margins of final formulation makers are going down. This could result in reduction in production volume of the drug, which is already low priced.

Financials

The company’s revenues have grown at a rapid pace. Although aided by an improving EBITDA margin, the PAT was low / negative due to high debt and interest costs.

IOL Chemicals Financial Snapshot

IOL Chemicals Financial Snapshot

The performance ratios have improved on various parameters in FY18.

IOL Chemicals Financial Snapshot

IOL Chemicals Ratio Analysis

  • For the quarter ended 30th September, 2018 the debt has reduced to Rs 350 Crores vs Rs 422 Crores at the end of FY18.
  • The revenue for H1FY19 was Rs 785 Crores. In H1FY18, the revenue was Rs 433 Crores.
  • The PAT for H1FY19 stood at Rs 52 Crores. In H1FY18, the PAT was just Rs 7 Crores.
IOL Chemicals

Growth Momentum Continues

Invest or Ignore?

The market capitalization of IOL Chemicals is ~ Rs 1,100 Crores. The stock trades at Rs 197.5 (FV:10). The PE Ratio is 14.69.

IOL Chemicals is heavily dependent on Ibuprofene API for revenues. The financials have improved only because of the steep rise in Ibuprofene API prices caused by supply side problems. The revenue and PAT growth is temporary as the market size of the API is also not big. The stock price has appreciated more than 240% over the last one year. This clearly indicates that the good news is factored in. Once the shut units are reopened, the revenues will decline on account of both volume and price. Also, there are red-flags like high promoter salaries, taking related party loans, dilution of equity and high interest costs which don’t work well for retail shareholders. BASF is coming up with new capacities by 2021 which will increase competition for the company.

For long term investors, we would not recommend this stock. However, for those looking for short term positions, the momentum behind the price and revenue can continue for some more time. However, once the correction sets in the stock can melt > 50% in a short time with frequent circuits. So, the allocation should be less and there has to be a stoploss in the trade.

When a stock is rising, we cannot predict the top and the end of the momentum.


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Multibagger Stocks for 2019 and 2020

Multibagger stocks for 2019 and 2020

A multibagger is what every investor dreams of. In true sense, it is getting more than 100% returns from a stock. Usually, investors want these multibagger returns over 12-24 months. The chances of getting a multibagger are higher when the market is bullish (like 2013 to 2017). However, many times good stocks are available for fair value and this gives investors a good opportunity to invest. In this blog, we will discuss few multibagger stocks for 2019 and 2020.

Disclaimer: These stocks discussed in the “Multibagger Stocks for 2019 and 2020” are on our watchlist. But, as on the date of writing this blog, none of the discussed stocks are a recommendation. We encourage all the readers to study these companies further to decide if it suits their risk profile.

Stock #1: Swaraj Engines Ltd.

We recently did a brief analysis of the company on our previous blog post.

Figure in Rs. Crore

Note:

After a dull FY14 to FY16 period, the tractor sales grew (and continue to grow) FY16 onwards. In this period, Swaraj Engines Ltd. has improved it’s EBITDA margin.

The tractor sales in India are expected to grow at ~ 6% p.a. over the next decade. The tractor penetration in India is just 13 per 1000 ha vs 32 per 1000 ha in developed market. As India moves towards more mechanized agriculture, tractor sales have a long runway of growth.

Positives:

  • Debt free, high dividend yield and free cash flow generating company
  • Has maintained string return ratios over the last decade
  • Increased capacity to 115,000 engines p.a. and expanding again to 135,000 p.a.
  • Swaraj tractors owned by Mahindra and Mahindra, which has a 42% market share of Indian tractor market
  • Tractor penetration in India is 13 per 1000 h.a. vs 32 per 1000 h.a. in developed markets

Key Risk Factors:

  • Has just one product and one client who is a related party
  • Heavy dependence on monsoon and policies of the Government
  • A PE Ratio of 21x is not cheap and ideal range should be a PE of < 15

Stock #2: VST Tillers and Tractors Ltd.

The next in our list of Multibagger stocks for 2019 is another agriculture sector company. VST Tillers and Tractors is into the business of making both tilllers and tractors. It stands to benefit from increased mechanization of agriculture in India. The stock has corrected by more than 45% from it’s peak.

Multibagger stocks for 2019

In Rs. Crores

Positives:

  • The company has lined up new launches in the > 30 HP tractor segment
  • Tiller sales to benefit from Government efforts to double farmer incomes by 2022
  • VST Tillers and Tractors Ltd. is a high asset turnover, free cash flow generating company
  • Although the industry is cyclical, the efficient working capital management and sound fundamentals help the company sail through slow years

Key Risk Factors:

  • The company’s revenues are heavily dependent on subsidies by the State Governments
  • VST Tillers and Tractors is losing market share in the tractor segment to other players
  • Slow years could see the PE slide down to 10x to 12x

Stock #3: PVR Ltd.

The number of people watching movies in multiplexes has grown exponentially over the last decade. Also, this growth is expected to continue (although slower) over the next decade as well.

Multibagger stocks for 2019

In Rs. Crores

Positives:

  • The company has constantly improved margins and return ratios over the last 5 years
  • PVR Ltd stands to benefit from the structural shift towards higher urbanization of masses and also from higher per capita spending
  • The management expects to add 90 screens in FY19 under the PVR Brand

Key Risk Factors:

  • The promoter’s (Bijli) name appeared in the Panama paper leaks raising red flags
  • The business is capital intensive and requires a lot of capex to increase presence
  • The management as relied on debt as internal accruals were not enough to expand
  • The Government policy on allowing outside food in multiplexes can crush revenues

Stock #4: Westlife Development

Westlife Development is a good investment for those bullish on the Quick Service Restaurant (QSR) space. The company operates McDonald’s restaurants in west and south India.

Multibagger stocks for 2019

In Rs. Crores

Positives:

  • QSR industry in India stands to benefit from more women in the workforce and higher spending by the masses
  • McDonalds is a low ticket restaurant and stands to benefit the most from increased spending
  • The appearance of delivery startups like Zomato, Siwggy and Uber Eats has helped these companies push up volume growth
  • After two tough years (FY15, FY16 and FY17), the QSR industry has improved performance in FY18 (as evident from the performance of other players like Jubilant Foodworks)
  • The management is targeting EBITDA margins of 14% to 15% which double of current margins

Key Risk Factors:

  • The management has been suspected of rigging stock price over the last decade
  • The company has low ROCE / ROE since FY13 and very companies manage to turn around from such a mess
  • The market currently expects a strong growth in revenues along with sharp rise in margins over the next 2-3 years. However, this confidence might go with just one bad quarter. In that case, there could be a sharp re-rating of the stock.
  • Local players flourishing due to delivery startups have lean business models and pose a threat to the branded QSRs.

Stock #5: Hexaware Technologies

Multibagger stocks for 2019

In Rs. Crores

Hexaware Technologies is a mid-cap IT company. Smaller IT firms are trying to use more automation to win clients from the legacy (read larger) IT companies. The stock has corrected ~ 43% from it’s peak within 4 months.

Positives:

  • The growth guidance in USD terms is 10% to 12%. The stock trades at a PE of 16.35
  • The company has a strong track record of generating high ROE and free cash flows
  • The company has a net cash of Rs 25 per share

Key Risk Factors:

  • The demand from large clients in USA (Mostly onshore) is strong but there are supply side issues. The supply issues stem from the US labour market conditions and visa issues.
  • A stronger rupee can hurt the bottom-line. However, this risk applies to every USD earning company.

So, these are our 5 Multibagger stocks for 2019 and 2020. We may or may not recommend them but we also have other fantastic stocks on our watchlist. Which companies from your watchlist have the potential to become Multibagger stocks for 2019?


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Swaraj Engines Stock Analysis

Swaraj Engines Stock Analysis

We do a Swaraj Engines Stock Analysis to see if it is worth investing in for the long term. Predicting multibaggers is tough. However, buying quality companies at a fair value helps compound wealth.

About

Swaraj Engines Ltd. (SEL) was promoted by Kirloskar Oil Engines and Punjab Tractors in 1985. After Punjab Tractor’s merger with Mahindra & Mahindra, the company primarily supplies engines to M&M’s Swaraj divison. Mahindra & Mahindra is the biggest shareholder.

Swaraj Engines Stock Analysis

The company’s plant is located in Mohali (Punjab).

Industry

The Indian tractor industry is the world’s largest by volumes, contributing 35% volume share. There is a mix of both international and domestic players in the industry. The segregation is based on horsepower:

Below 30 HP – Low

30 HP to 50 HP – Medium

Above 50 HP – High

The 30Hp to 50HP segment has a 82% market share.

The fortunes of the tractor industry are tied to the monsoons. Good monsoons, higher spending by farmers and thus more sales of tractors. In FY18, tractor sales grew 22% in volume terms (709,000 vs 582,000). Currently, Trem3A norms are in place. However, the industry is bracing up for transition into the Trem4 emission norms by 2020.

M&M is the market leader

Both Mahindra and Swaraj put together enjoy a 42.5% market share of the tractor industry. However, the two companies compete in many geographies.

Product and Raw Materials

Swaraj Engines manufactures diesel engines for tractors. The range is 20bhp to 60bhp.  The current capacity of 120,000 engines per annum will be increased to 135,000 engines. Raw materials make up ~ 74.5% of the revenues.

Financials

In Rs. Crores

Swaraj Engines has gained market share and improved margins during the dull FY14 to FY16 period. The entire revenue is from sale of engines to M&M for the Swaraj tractors. The realization per engine sold has remained in a small range.

Swaraj Engines Stock Analysis is tricky as the entire revenue comes from a single customer who is also a related party. The company enjoys little pricing power as evident from the stagnant realisation per unit. However, the company has low working capital requirements. The investment required in inventory and receivables is very low. The company receives payment within 7 days.

  • The company is free cash flow generating and debt free
  • There is negative working capital requirement
  • The company has maintained a high ROE of more than 20% since FY09
  • There is ~ Rs 86 Crores in current investments and bank as per the Balance Sheet for 30th September, 2018
  • The company did a buyback in FY18 amounting to ~ Rs 70 Crores

Peer Comparison

Peer Comparison

Although the above four companies are not direct peers, their fortunes are more or less tied to similar factors. Moreover, all the above companies are debt free and offer a good dividend yield. Swaraj Engines is trading at higher valuations but it has a better revenue growth rate on a 5 year CAGR basis.

Higher farm mechanization can benefit all of the above compared companies. But since the products are different, this cannot be treated as a direct apple to apple comparison.

Key risk factors

  • Dependence on monsoon which varies year on year
  • Agricultural policies of ruling governments can have severe medium term impacts
  • Dynamics related to the regulations regarding emissions
  • Low pricing power
  • Long term earnings growth is usually in higher single digits for agriculture sector companies
  • Depends on one client, a related party, for 100% of the revenue
  • Has a single product and no ambitions of diversifying

Opportunities and Strengths

  • Healthy balance sheet
  • Clear cut related party transaction policies
  • Strong cash flow generation record
  • Farm loan waivers might boost tractor sales

India still has a long way to go in mechanization of agriculture. The tractor density for developed markets is 32 per 1000 ha but in India it is 13 per 1000 ha. Moreover, developed markets have a higher usage of  > 50 HP tractors. Nearly 70% of the farmers in India hire tractors on rent.

Valuations

The stock trades at a PE of 20.9. The current market cap of Rs 1,760 Crores which 2x the sales. For auto component makers and companies operating in the agricultural equipment space, the ideal PE is usually below 15.

However, caveat needs to be exercised before concluding the Swaraj Engines Stock Analysis. Due to high dividend yield and high expectations of future growth, the stock could still command a premium – 15x to 20x.

Verdict

Swaraj Engines has fallen ~ 40% from it’s peak. The stock was trading at 40x it’s earning which was not sustainable. But at 20x, the stock’s valuations seem fair. Keeping in mind the opportunity size for tractor market in India, we feel Swaraj Engines Ltd can be a long term compounder. From the current price, Swaraj Engines Ltd has to potential to deliver ~ 12% CAGR (or more) over the next 3-5 years.

At Alphamultiple Advisors, we would like to buy the stock at lower valuations. It is on our watchlist but not a recommendation as on date. What are your views on the Swaraj Engines Stock Analysis?

 


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Sharda Motors Stock Analysis

Sharda Motors Stock Analysis

The Relan family (Promoter group), owns 73.08% of Sharda Motors Stock. The company’s Managing Director is Ajay Relan while Sharda Relan (Mother of Ajay Relan) is the Co-Chairperson. The company started operations in 1986 and has it’s presence in the Auto Ancillary space. The main products of the company are Exhaust Systems, Suspension Systems and Seat Trim and Frames. Exhaust products make up 60% to 65% of the revenues.

Sharda Motors Stock Analysis

  • Mahindra & Mahindra, Hyundai and Maruti Suzuki (Bharat Seats) make up 81% (Rs 928 Crores) of the revenues
  • Earlier M&M contributed ~45% of the revenues but now the top 3 have equal contribution
  • Auto ancillary companies have a weak bargaining power against the auto makers

The company has a ~ 28% stake in Bharat Seats Ltd. which is a JV between Suzuki, Maruti Suzuki and Sharda Motors. Sales to Bharat Seats contribute Rs 366 Crores to the revenues.

Industry Analysis

The passenger vehicle industry in India is expected to grow at 8%. Auto ancillary companies are expected to grow at 11% p.a. for the coming 3/5 years. Since FY14, most of the auto ancillary companies have grown their EBITDA margins. Sharda Motors has seen it’s margins expand from 7.41% to 13.44%, however, others have seen just a 100-300 basis points margin expansion.

Financials

Standalone figures in Rs. Crores

  • The revenue growth has been in single digits over the last 3 / 5 years
  • The margin has expanded due to lower raw material cost
  • Depreciation and finance cost have reduced and aided PAT growth
  • The company has converted profits to cash and met capital expenditure through internal accruals
  • Sharda Motors had Rs 104 Crores worth of investments in mutual funds on 31st March, 2018, moreover it is a debt free company

Issues

i) Salary of Rs 4.6 Crores to Sharda Relan (Age: 82) – Mother of MD

Rs 4.6 Crores makes up roughly 5% of the company’s profit. Moreover, one has to wonder if this adds any value to to the revenue or profits.

ii) Infighting in the family effecting revenues

Rohit Relan is the brother of Ajay Relan and is also the CMD of Bharat Seats Ltd. Due to disputes in the family, he was not re-appointed to the board of Sharda Motors Ltd. As a result, Bharat Seats has lowered the orders to Sharda Motors. The issue has gone up to the NCLT.

Bharat Seats Ltd. contributes a significant part of the revenues of Sharda Motors. A reduction in orders will impact both the revenue and profits of the company.

Valuations

  • PE Ratio: 10.68
  • M.Cap to Sales: 0.78
  • Market Capitalization: Rs 906 Crores

The stock trades at a PE Ratio of 10.68. Sharda Motors Stock price has fallen more than 50% from it’s peak of Rs 3,099. The company is available for Rs 906 Crores while it has current investments worth Rs 104 Crores. That means, the business is available for ~ Rs 800 Crores.

However, in any company, between business profits translating to shareholder profits stands the Management. We see red flags in the salary that the MD’s Mother withdraws and the family dispute might hit the revenues of the firm. Despite being cash rich, the company takes loans from the promoter family and pays ~ 8% to 10% interest on the same. Though the firm clocked double digit growth in FY18, the Q2FY19 figures show a degrowth of 1.9% in the revenues.

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VIP Industries – Stock Analysis

VIP Industries

We do a VIP Industries Stock Analysis as we have received multiple queries from our readers on this stock. Earlier the stock was in our Momentum Portfolio. We exited the stock at a 8% profit in August 2018. The stock was not a long term recommendation from us due to valuation concerns. The stock is down ~ 41% from it’s 52 week highs.

Company Overview

VIP Industries is the market leader in the luggage industry in India. Infact, the company is Asia’s leading manufacturer and seller of luggage (both hard and soft). It ranks second globally in the luggage market. Soft luggage makes up 76% of the revenues of the company while the hard luggage segment is in decline and now makes up 24% of the revenues. The company has different brands catering to different segments. Alfa, Aristocrat, Caprese, Carlton, Skybags and VIP are well recognized brands of VIP Industries. The company was established in 1971 and the promoter of the company is Dilip Piramal, who runs the company with his daughter.

Business Overview

The luggage industry is primarily unorganized (55% market share). The organized players make up a near oligopoly. VIP Industries enjoys a 55% market share while Safari and Samsonite take the remaining 45% of the organized segment. The industry earlier was seen as a utility segment but the trend has slowly shifted to an “accessorized” segment. The segments range from premium to value. Backpack is the fastest growing segment and it also has a higher replacement rate than the luggage segment. The industry depends on China for raw materials and semi-finished luggages. The industry stands to benefit immensely from the rise in air passengers. Every family member now carries their own luggage while earlier the family would carry a single big trunk for all members.

Xiaomi’s Entry is the latest disruption in the industry. The Chinese smartphone maker has recently entered the luggage industry in India.

A simple check of the product prices online show that Xiaomi’s luggage is cheaper by atleast 20%. The airline industry is booming but airline stocks won’t make you money. The luggage sector offers a good proxy to ride on the air passenger growth in India.

Financials

VIP Industries Stock Analysis

VIP Industries Stock Analysis

VIP Industries has averaged a ~ 10% CAGR over the 3 years and 5 years period. FY18 has been a standout year for the company in terms of margins, which have been improving consistently on a year-on-year basis. The company has demonstrated efficiency in deploying capital as it’s ROCE and ROE have improved significantly between FY12 and FY18. It has remained debt-free, gained market share and has grown its revenues on the back of growth in volumes. Also, VIP Industries has a strong track-record of converting profits to cash.

VIP Industries Stock Analysis

The luggage industry saw a period of healthy growth in margins and profitability over the last few years. The revenue growth remained in high single digits for players like Safari and VIP (at par with industry growth). However, the entry of Xiaomi will dent the growth and margins of existing players.

Also, the annual report shows a board resolution (ordinary) to pay Radhika Piramal a salary of GBP 240,000. Further more, the company will bear the relocation expenses too. But VIP Industries has no operations in London!

 

 

This is a corporate governance red-flag for a company that has it’s business interests in India.

Valuations

PE Ratio: 37.36

PB Ratio: 11.39

The PE Ratio of VIP Industries has fallen from 59 to 37 in 40 days. The stock had been commanding a PE Ratio of 40+ for a long time now. We believe that the current valuation is very expensive for the stock. If VIP starts losing market share to MI and it’s margins go low then the premium that VIP commands will go down. Add to the threats the increase in duties on imported luggage. This makes raw materials and other inputs expensive.

Between Fy13 and FY18, the profits went up by 400% but the revenues did not even double! There is a high chance of profit growth decreasing and pressure on margins increasing. Although the stock is down 41%, our VIP Industries Stock Analysis shows no reason to invest in the stock.

Result of VIP Industries Stock Analysis – Avoid the luggage sector.

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