It’s rare to find Market Leaders in a growing industry with huge scalability at single digit PE and that too in covid-proof industries.
It normally happens when the company or the industry have had a few rough years in the interim and the investors have completely forgotten them.
Well, as investors our job is to unearth such companies, do a proper due-diligence, see if the issues are behind, company is on the growth path and invest at such low valuations well before other investors join the bandwagon.
Just yesterday, we released our New Stock Recommendation for long term investment for our Premium Members and it is based on the same logic as described above.
We come out with only 5-6 new stock ideas for long-medium term investment every year and would like to share with you details on the latest one.
- Segment – Essential Products
- Market Cap – Less than 5,000 crore
- Enterprise Value – Less than 2,800 crore
- Promoter Holding – Greater than 50%
- FY 11 – FY 21 Sales Growth – > 15% CAGR
- FY 11 – FY 21 Operating Profit Growth – > 18% CAGR
- FY 11 – FY 21 PBT Growth – > 22% CAGR
- Debt – Company is debt free on net basis
Key Reasons as to why we like the company:
- Company deals in essential products and its business was largely unaffected even during the first phase of the lockdown
- Significant growth in business in the last 10 years without any equity dilution or leverage on the balance sheet.
- After a brief lull, the company is again on the growth path and expected to record 15-20% growth year on year on a consistent basis
- Major expense on R&D for continuous development of new products
- Industry itself growing in double digits
- Last, but not the least, despite a decent track record, expectation of 15-20% year on year growth and debt free balance sheet, the stock is trading at less than 10 times pre-tax earnings
Thus, considering very low valuations, market leadership and very good potential for growth, we believe the stock is offering a good investment opportunity around current level. We have also added the stock in our Model Portfolio.
If you are struggling to find good Stock ideas for investment, you are reading just the right stuff and can access latest Stock Reports, Special situations and Model Sheet in Premium Memberships HERE
SEBI Research Analyst Registration No. INH100001690
Research Analyst Details
Name: Ekansh Mittal Email Id: [email protected] Ph: +91 727 5050062
Details of Associate: Not Applicable
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Whether the research analyst or research entity or his associate or his relative has any financial interest in the subject company/companies and the nature of such financial interest – No
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