Hidden Gem - Jan 2013 research report is released by our equity analysts. Our 1st Hidden Gem stock of 2013 is the company which offer great investment opportunity for long term investors. Company is having good fundamentals and rewarded share holders by paying consistent dividend during last 10 years.
Here is a brief about company's business:
Company began its commercial production in April 1990. It is one of India's largest manufacturers and caters to companies like HUL, Glaxo, Nestle India, Colgate, Godrej etc and one of the few listed companies in India in its segment. Today, it operates with six manufacturing units, all the plants are ISO 9001: 2008, ISO 22000: 2005 certified.
The legendary Walter Schloss checked the stock on the following 4 criteria to determine if the stock merits a place in the portfolio:
• Zero or very low debt equity ratio
• High Promoter holding
• Dividend yield of at least 3%
• Stock purchase price lower than book value
This company satisfies 3 criteria, except for Zero or very low debt equity ratio. However, we believe that company now plans to consolidate its operations without doing any further expansion in its capacity in near future and reduces its debt going forward. This will strengthen the balance sheet of the company and rerate stock valuations significantly from current levels.
We believe that company can be a direct beneficiary of growing domestic consumption in India, stock at CMP offers a great opportunity and can become a 10 bagger in next 3-5 years. Hence, recommended our members to invest in this company at CMP with maximum portfolio allocation of 7% of their equity portfolio.
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Saral Gyan Capital Services.