CMP Rs 82 (FV 10)
Analyst : Janak Shah (M.B.A. Finance)
Market Cap Rs 819 crs
Date: 17th Feb 2017
Target 1 year : Rs 100+
Multibagger in 3 years
About the Company:
The company was promoted by initially by the Dandekar family and then it was sold off to the Japan based Kokuyo group at Rs 110. The company has since then not crossed that price. Now after the big expansion which is about to be complete, the stock is all set to soar to new heights.
The company a major presence in stationery items. Camlin was already into a lot of branded stationery products, after kokuyo took over the company now the number of products have increased a lot and there are many more in the pipeline. Firstly the existing plant was totally dismantled and made suitable according to the new needs of Kokuyo Camlin. There are 4 range of products .Student range, Office professional range, artists & designer range and hobbyists range.
For the year ended March 2014, the sales were at 468 crores and net loss was 11 crores. For the year March 2015, the sales were seen at Rs 543 crores and the net profit was Rs 4.92 crores. For the year March 2016 the sales were at Rs 614 crores and net profit was 5.26 crores. This year the sales will be at a similar level but the next year will see jump in sales and profits as the new plant will be the contributor to the increased numbers.
Promoters hold about 75 % while the , public holding is 25%
Comparisions to Peers:
There is no listed peer who has presence in the pure stationery segment.
Kokuyo Camlin came out with a rights issue and the proceeds were used to set up a huge plant at Patalganga. This plant is about 14 acres. The plot of the new plant is 56600 mts. Out of this the new factory will occupy 26400 sq mts and the old vasai and taloja plants will be transferred to 12000 sq mts space.
The Patalganga plant shall also be equipped with the latest machines and equipment. It shall be a state of-the-art manufacturing unit with cutting-age technology and advanced automated production lines. The plant will immediately take the manufacturing efficiencies to the next level in terms of volumes as well as quality of products, not to mention the compelling cost advantages derived from single-location production. As the Indian stationery market becomes more competitive and moves towards premiumisation, we are confident that our integrated manufacturing at Patalganga will enable us to consolidate our presence and expand into newer categories with more innovative products, competitive pricing and top-class products. From a turnover of 600 crores, the turnover is poised to rise to 1000 crores. This will happen in the next 3 years.
The share which is quoting at Rs 82 has the potential to cross the 100 mark in the medium term. The company can also become a multibagger if one keeps in mind a long term investing perspective.
( Disclosure: The analyst has holdings in the company as on date of issue being published)
Analyst ( Janak Shah ) is a sebi certified research analyst Registration No: INH000001717