Hidden Gem - Nov 2012 research report will be released in next 12 hours. Hidden Gem stock selected for the month is a micro cap company of 50 crores and offer long term investment opportunity. Company is having good fundamentals and rewarded share holders by paying consistent dividend and bonus share in last 5 years.
Here is a brief about company's business:
Company offers premium quality branded products engineered with german technology, company's products are featured prominently in major retail establishments overseas like BnQ (UK), Castorama (France), Bricodepot (France), Menards (USA), Obi (Germany) and Costco (Canada).
The company has a strong global presence and benchmarks its products against the most select competitive brands. In the global market, the company has formed strategic partnerships across the globe, with major companies in UK, USA, Russia, France and others.
Company's unique product in terms of quality and design makes them different from other brands / products available in the same category. The product profile of the company is definitely unique in terms of raw materials being used in the manufacturing and the premium they command over their peers.
After achieving success globally, the company is now on a journey to replicate it in the domestic arena. With it's premium products, the company is targeting the nation's growing cadre of affluent and influential and informed customers, both individual and institutional. In India, company sell their product through a network of more than 2000 dealers.
Company is a professionally run organisation, one of the major strength of management is to use innovation and re-engineering especially in the use of nontraditional materials to achieve superior results and superior products for niche upscale markets.
Few facts which make this stock an excellent investment candidate for long term:
1. Sales turnover of the company is doubled in last 5 years, where as PAT has declined in last 4 years due to high raw material prices and slowdown in US and Europe. Company is on an expansion spree and is now exploring new markets to drive growth.
2. Company have made an entry into some entirely new geographies like Columbia, Hungary, Iran and Israel. Company has also customized several new models in terms of new styling and design for their clientele in Europe, Russia, USA and the Far East.
3. Management is now looking aggressive to grab domestic market share for their premium quality products. Company is also increasing its product portfolio to offer complete package of new products to their clientele. Currently, company generates 80% of revenue from exports and now aims to increase their domestic sales from existing 20% to 30% in next couple of years.
4. Domestic sales of the company is increased from 1.1 crores in 2001-02 to 12.4 crores in 2011-12. In fact, in FY 2011-12, domestic sales of the company have grown by nearly 43%. Company is also opening galleries to show case their products in metro cities like Mumbai, Delhi and Ahmedabad to boost their domestic sales.
5. Management has rewarded share holders by paying consistent dividends since 2006. Dividend yield at current market price is above 2.
6. Last but not the least, in terms of valuation company is trading at PE ratio of 11 and ROE / ROCE of 15-17 which is expected to improve in coming quarters considering addition of new products offering and increase in revenue from domestic market. We expect company will deliver significant increase in top line & bottom line in coming quarters with increase in operating margins.
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