ACRYSIL INDIA - QUALIFIED FOR AN EXIT FROM PERIODIC CALL AUCTION...

We have discussed a lot about Periodic Call Auction trading system – the system SEBI introduced to suck out the remaining retail investors from equity market. It also proved once again -  theories successful  on paper may not repeat success in practical  life. Why SEBI continuing this system without any modification even after it  proven as an utter flop is the big question  !!!. Introduced for reducing manipulation and increase liquidity , this system actually  reduces  liquidity further and caused for sharp crash in the market capitalization of  even standard companies included in this list. On the other side, it did not contribute anything to control manipulation and manipulators still have their own tools for manipulation. In nut shell ,PCA is the worst and anti retail investor trading mechanism ever introduced by the authorities . To come out from PCA ,SEBI stipulated some criteria which  also included some funny conditions . An average volume  of 10000 shares per day or average 50 trades per day in all days of any quarter are the  two major criteria fixed by SEBI . The anomaly in this system is, it is not considering the equity base or floating stock of any company .I don’t think it is fair to fix same  criteria for companies with 3 cr equity and 25 % floating stock and 300 cr equity and 75 % floating stock .  Another point is -  a low quality stock which is trading @ 0. 5 paise can exit from this system if there is an average turnover of mere Rs.1000 ( 0.10*10000)  per day where a  quality stock  trading @ Rs.2000 can't escape from this system even if there is an average turnover of Rs.1.99 Crore ( 2000*9999 ) .Frankly speaking ,I can't understand the logic behind it .More than this ,automatic cancellation of orders in each hour and need of re-entry in each hour creating lot of trouble both for investors and broking firms . Retail investors apathy towards this mechanism truly reflecting in the falling trading volume and sharp decline of the prices of even goods stocks which included in PCA in the past few  months . The real irony is – this mechanism is introduced by the same SEBI who are spending time and efforts  to promote retail participation in market and also encouraging the listing of small companies . Prevention of manipulation is necessary, but  I don’t think ,killing 99 innocents  to prevent the manipulation by the  remaining 1 is not the proper way to execute this .

                                                                              Let us come to the point .Only very few  quality companies managed to come out of this deadlock once it entered into PCA. Exit and entry revisions are normally happening in the first week of each quarter. Acrysil India will be a surprise exit candidate in the next revision . Total trading days during September – December quarter is 62 days and company already recorded a trading volume of more than 781500 shares which is enough to qualify for an exit ( 62*10000 = 620000  is the required quantity ) .

ACRYSIL INDIA 

Acrysil India is one of the rare companies I recommended earlier  even from the PCA list due to its unique products,robust financial performance ,excellent dividend distribution history ..etc. It is also one of the rare companies recorded its life time high price even after inclusion in Periodic Call Auction. In addition to the exit of PCA ,this Kitchen appliances manufacturer reported very good performance in first half  of current financial year where it reported an EPS of Rs.11.05 against Rs.12.35 reported for the entire full year in 2012-13 . I believe ,company’s positioning as a niche high end producer and its successful efforts to find strong foreign collaborators for financial ,technical and marketing alliances will bring more success going forward. Germany based  Schock and Co GMBH ( leader in Quartz Kitchen Sink’s in various countries ) holding more than 10 % stake in Acrysil and marketing Acrysil’s products in many countries. Recently company started co operating with  Berbel Ablufttechnik ,another German company  for Kitchen Chimneys and appliances. .Management is also investor friendly and  not showing any  hesitation to share their success with minority share holders  .Last year they distributed bonus shares and a dividend @ 33 % .


This is the kind of stocks having almost all ingredients to become a  multi bagger over a period of time  due to many reasons like :

* Low floating stock

* Niche Products with reputed brand "Carysil" targeting ultra premium market segment ( Company is the only producer in India and one among the total four producers in the entire world for first quality Quartz Sinks 

* Investor friendly management 

* Revival in the economies of its major markets 

* Huge untapped market potential in India itself.

* An under invested stock by Mutual funds,Institutions and Big Individual Investors

* Large capacity addition in recent times backed by strong marketing alliances with world leaders .

* Aggressive R & D efforts to develop new models...etc

. I expect more serious investors will look into this stock once it came out of PCA within four weeks  and chances for sharp re-rating .Recommending this stock @ CMP of Rs.150 for investors with some risk appetite .

To get more understanding about this company ,you can refer the following  links.

LINK 1  ,  LINK 2 

Product Demo LINK

Link to Company Website HERE

Link to Latest  Annual Report  HERE

Use the search option to find out my  old recommendations of this stock  in this blog 

Disc: I have vested interest in Acrysil India