Few Small Cap Multibaggers For Long Term

1) Photoquip India Ltd:
Photoquip owns most powerful brand for digital flashlights in world for sales in India and exports to its Swiss owner which sells across the globe. The brand is Elinchrom. It would be an understatement to say that Elinchrom is to digital flashlights as Tag Heuer/Omega to watches or Ferrari to Cars. There are only a handful of other brands like Bowens , Alienbees, Profoto and Hensels at the summit of photographic flashlight pinnacle which come close in some aspects of photographic flash equipment . Photoquip have long term relationship with Elinchrom since 1984. It would be rather germane to say Elinchrom is to flashlights what Bugatti or Lamborghini is to Cars or Rolex to watches, Rolex too is a Swiss brand like Elinchrom

Source: Amit Arora's Research

Stock Estimates:

This is one company where I feel that stock is pretty much undervalued with book value close to 70. One reason for that is, slightly cunning Management. As per the rules guided by SEBI, promoters of the company are allowed to buy a maximum of 5% shares from open market per year and this can go on, till a maximum of 75% holding by promoters. Right now, they have 53.5% holding which can be taken to around 75% in coming 4 years. During these 4 years, the management might try to keep the stock price as low as possible, so that they can accumulate at lower levels. Once promoters are done with their buying, we might see dividend also getting declared by the company and the stock might shoot up heavily.

Invest to get multiple returns but not necessarily in short term. The time taken is dependent on management and their thinking.



2) Cravatex Ltd:

There can be 2-3 names that can be given to this company. Many call it Proline Fitness or many of them, FILA India. Whatever you call, it represent Cravatex Ltd., the future in Indian Health & Sports Industry.
Reason for going after such stocks is that I believe, the Health & Sports industry is one indutry which is expected to grow at great pace in coming years, especially, here in India.

Recent Achievements:
1) Cravatex Ltd has informed BSE that the Company has successfully concluded negotiations with the brand owner and has reached a mutual agreement to extend the Sub-license Agreement for the use of "FILA" trademark for India, Bangladesh, Pakistan and Sri Lanka for a period of 30 years starting from January 01, 2013.The Company has also acquired the License for Nepal and Bhutan for the same period.

2) Cravatex Ltd has informed BSE that the Company has successfully concluded negotiation to extend the Exclusive Distribution Agreement for products of Johnson Health Tech. Co. Ltd (Taiwan) till December 31, 2025 for India, Bangladesh and Sri Lanka

This is one company where I genuinely feel that no matter how much I write, its always going to be less. So, its better, if someone ask me related queries rather than me posting more & more details.

Stock Price Estimates:

I started tracking this stock when it was 160 ex-bonus, from where it went to 892, then the price got splitted to about 450. It again went to 800 (799 to be precise), which can be calculated as 1600 (ex-bonus).
I have seen the stock rise 1000% from the day I started tracking.
Off-late the stock has seen some sell-off, due to rupee depreciation as their main business is buying products from overseas and selling it in India, plus the fact that selling of luxury products go down when there is fear of recession. These 2 were the prime reasons of it recent downfall to about 400-450 levels.
But as far as I think, considering long term, India will some day overcome these issues and thing will get back to normal.

Disclaimer: Both of companies are very small cap company right now, hence there is always enough risk associated with it.
Each one is requested to do its own research and consulting before investing. I have invested good amount in both the stocks.

Thangamayil - A Multi-bagger In The Making

Thangamayil, who? This was the question that popped up in early 2010 when it was announced that Thangamayil Jewellery Ltd (TMJL), a jewellery retailer based in Madurai in southern Tamil Nadu, was coming out with a public issue. It was a modest IPO – for Rs 28.75 crore.

Stock performance:

Apart from the fact that shares of many jewellery retailers from the State who had entered the capital markets more than a decade back were either languishing or had virtually disappeared from investors’ radars, the Madurai outfit was not well known outside the region. It was not clear how the stock would perform once it was listed.

But the performance of the stock since listing has surprised those who track the markets. Thangamayil Jewellery, which traded at a discount on the day of its listing on the Bombay Stock Exchange in February 2010, has scarcely fallen below its Rs 75 issue price(face value of Rs 10) in the past two years. The lowest it recorded in FY 2010-11 was about Rs 80 in April 2010 from where it has been steadily ascending. True, market gyrations affected this stock too. But its valuations have remained always much higher than its offer price. 

You don’t need to go too far to understand the reasons for its strong stock market performance. Sales, which were Rs 127.15 crore in 2006-07, has grown nearly ten times in the past six years to Rs 1,131.61 crore in FY2011-12. Its net profit has moved up from Rs 4.02 crore to Rs 59.06 crore during the same period during which the company expanded its branch network. In the current fiscal, the company is targeting 50 per cent growth in income, to reach Rs 1750 crore. 

Branch expansion:

Mr Ba. Ramesh, Joint Managing Director, TMJL, Madurai, while explaining how the company got the confidence to go public when there were not many listed companies from southern Tamil Nadu, said that many companies from the region were “not going public due to their size.” But in TMJL’s case, the initial success in branch expansion gave him confidence “to scale-up the operation that in turn necessitated an equity fund-raising exercise”. The size of the issue, at about Rs 29 crore, was very small and its visibility was also low. He said “being a small issue, it sailed through” and no great efforts were made by merchant bankers and thanks to reasonable pricing, “a good amount of retail appetite was witnessed”.

The success story scripted by Thangamayil Jewellery also reinforces the belief in the growing purchasing might of the rural/semi urban population of the country, already established by the performance of the automobile and FMCG sectors in this market segment. And it has broken the myth that high value and fashionable products like jewellery are mainly patronised by the urban elite.

Out of its total branch network, only a handful – Madurai, Tuticorin, Salem and Coimbatore branches – are in municipal corporations.

Mr Ramesh said that more than 60 per cent of their current sales are from small branches. This ratio would only improve in coming years due to faster penetration into the business of the unorganized sector, whose presence is more in smaller towns, by the organised players in the industry. Another reason was the growing disposable income with the lower middle class because of their children getting into well-paying jobs in sectors such as software.

He argued that only bigger brands could offer “cost effective pricing due to their market positioning.”

Therefore, at the end of the day, both the customer and the company will benefit from TMJL’s strategy of penetrating the rural areas and small towns. For the time being, TMJL will be only in Tamil Nadu, till such time its consolidation process is over.

What could be a challenge is managing the supply chain since its branches are dispersed across 17 cities and towns spread in the State. 

Source: The Hindu Business Line

Stock Price Estimates:

Current Market Price: 218.3

Just 2 years back, TMJL IPO came and was offered to public at 75 Rs. It has gone strength to strength from then. Today, even after a appreciation of almost 300%, the stock looks good for much more.

Promoters of the company bought back around 3% of shares in March 2012 when it was around 150-170 levels. They have started buying again as suggested by SAST report on 20th Sept 2012.

Their average buying price works out to around 215 Rs per shares, which is a confidence booster among investors.

Ajanta Pharma - Rewriting The Future Of India In Pharma Industry

Ajanta Pharma is a specialty pharmaceutical company engaged in the development, commercialization and manufacture of pharmaceutical products. The company products are sold over 30 countries world-wide. Ajanta Pharma Ltd has planning to establish two separate manufacturing facilities an investment of around Rs.400 crores & it will be completed in 24 months. The company has planned to launch its first new product in US market in first quarter of next financial year. During the quarter, the robust growth of Net Profit is increased by 56.25% to Rs.195.80 million. Net Sales and PAT of the company are expected to grow at a CAGR of 21% and 30% over 2011 to 2014E respectively Annual Estimated Results: (As per PriceWaterCoopers Report on the company)                                                                                                              (Amount in Cr) Years FY12 FY13 FY14 Net Sales 604.26 725.22 819.39 EBITDA 133.15 164.60 190.05 Net Profit 66.92 84.76 100.92 EPS 28.19 (adj) 35.93 42.78 P/E 13.48 10.58 8.88 Stock Price Estimates: Current Market Price: 421.50 The stock has appreciated from 144.55 in Oct 2011 to 447.70 just a few days back, which means an increase of 309.7% in just 11 months, which is commendable. As per the analysis the company is still good for much more. The promoters of the company has been on a buying spree and have taken their holding up to 71.84% till Jun 2012 as per official figures. As one can see the buying they have done after June 12, it seems that their holding might have reached around 73%.  In spite of 300% jump in past year, the promoters are still buying daily and aggressively which is good to see. Promoters can hold maximum up to 75% in a private company, which is their target, and it should be achieved within next 2 quarters.