Saturday, April 2, 2011

KANCHAN INTERNATIONAL - ONLY FOR BRAVE HEARTS

 
























Kanchan International is not a valuepick and not a stock for all.This is only for brave hearts ready to loose the entire investment for a possible multibagger.This high risk is mainly due to the hyperactivity of operators in this counter and the erratic price movements due to this factor.In 52 weeks ,Kanchan touched a low of Rs.7.25 and a high of Rs.219 with a series of upper and lower circuits and now trading around Rs.68/-.Kanchan is a well known brand in household appliances especially for their Mixer Grinders.They are also producing Pressure Cookers,Juicers,Food processor,LPG Stove,Electric iron,Microwaves,table fans..etc.Other than 'KANCHAN' ,company also owns another brand 'MARLEX'.Even if this company is in existence for the past 20 years ,it could generate a turnover of Rs.30-35 Cr per year even with a negative cash flow .I strongly feels that this is mainly because of the existence of more than one private companies in the same group and the sales are channelized through these closely held companies. Yes,all these are negatives .But what catching the attention at this point is the recent initiatives taken by the management. Recently promoters took 25 lac warrants and it is expected to convert into shares to hike their stake.Company also in a recruitment drive
to expand its operations mainly in marketing and servicing. Kanchan is targeting a turnover of Rs.150 Cr in two years which seems aggressive but the possibility of the merger of group companies with itself may save a lot of efforts in this direction.In the financial front too ,company is showing some improvement after a long gap. In the last FY ,company posted a turnover of Rs.35 Cr and a loss of Rs.1.37 .For the nine month ended December qtr of this FY ,Kanchan posted  a turnover of Rs.34 Cr and a net profit of Rs.1.53 Cr.On a equity base of just 3.21 cr it is expected to close the full year with an EPS of Rs.7/-.In the past ,company paid dividends whenever there is even minimum profit in any year.So all together there is lot of negatives like the integrity of management,lack of clarity of future course of action,negative cash flow...etc ,but the other side is  equally strong like the potential of the industry, re-rating of the sector,new initiatives of management  ..etc.TTK prestige and Gandhimahi Appliances are the  two listed players from this sector which re-rated substantially in recent past.Governments initiatives like National Rural Employment Guarantee scheme ..etc are keeping the flow of money to the rural sector which is expected to significantly influence the demand of products manufactured by companies like Kanchan. Future of Kanchan depends of many 'IF's but if everything clicks well this may turn as a multibagger.Since it is a  high risk high profit situation,suggesting to keep it in your radar and take own call after due diligence.Kanchan is currently trading around Rs.68/-

6 comments :

  1. DEAR SIR, IS JUPITER BIOSCIECE IS A GOOD GROWTH COMPANY FOR FUTURE????

    ReplyDelete
  2. Jupiter Bio - Doubtful result and sceptical about the management.

    ReplyDelete
  3. very good analysis sir............keep it up......

    ReplyDelete
  4. Any updates on :

    Neuland laboratories
    Krebs Biochem

    Kinldy post updates on earlier recos., especially where there is a chance to add to earlier purchases, for long term, having lower price and fundamentals not changed.

    Thanx for wonderful ideas on long term investments!

    ReplyDelete
  5. Dear Friend
    Hold both Neuland and Krebs.

    Thanks
    V

    ReplyDelete
  6. Dear friend,

    i bought koutons Retail india ltd @30 rupees. wat should i do nw sell or hold.can u tell me the future propect of this company.


    thanks in advance

    ReplyDelete

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