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This month Hidden Gem is a small cap stock from chemical engineering sector which has experience of more than 80 years. Company is a subsidiary of parent company with vast experience and expertise in a niche segment. Company offers unique and innovative solutions to its various clients in India in the field of chemical engineering. Company did extremely well in the year 2005-2006 but later due to impact in demand of its products and services company performance was affected in the last couple of years. This was due to the cyclical nature of business in which it operates in.
But in the beginning of this year company has shown good performance. In last 2 quarters, sales revenue of the company has increased by more than 50%. Moreover, its an subsidiary which is getting complete support from its parent company by introducing innovative solutions for its clients in engineering. Company do have presence in providing water treatment solution and products which can create good scope for business opportunities in India.
Team of equity analysts at Saral Gyan believe that the company is all set to deliver strong numbers in terms of growth and profitability in FY 2010-11 & 2011-12. Stock is trading at attractive valuation when compared with peer group and could be a multibagger stock with two year time horizon. Usually MNCs trade at premium valuations when compared with local players but considering the nature of business which is difficult to understand, we believe that company is overlooked by investors fraternity.
While selecting Hidden Gem of the month, our approach differs from that of most other firms. No attempt is made to provide research on all or most of the companies within a given industry. Instead, the role of the analyst at Saral Gyan is to select and follow only those companies that have above-average growth prospects and above-average quality, the thesis being that investing in these companies will generate above-average returns over the long term.
We use a number of factors in selecting a coverage universe of micro & small cap companies with good growth prospects. Among them are the company's product line, level of service and, most important, the company's management.
You can subscribe to Hidden Gems to receive complete small cap stock research report of this month, Hidden Gem - November 2010.
In case of any queries, please write to us at info@saralgyan.in, sales@saralgyan.in
Regards,
Saral Gyan Team
