Till about two years back i.e. Aug’09, the stock of VIP Industries was trading at Rs 75-80 and guess what it’s already a 12 bagger with current market price hovering around Rs 960.
You all knew for sure the brand equity of VIP Industries, the bellwether in the travel products i.e. luggage, however most of you must have missed out the same and thus missed out a 12 bagger for your portfolio. In investments, one should keep it simple and if you just look around yourself i.e. the products at your home, you may end up buying a multibagger stock for your portfolio.
Well that much for VIP Industries, what about finding another multibagger from your surroundings which is as much comparable to VIP industries in both brand equity and business economics. Well here are some details:
Cera Sanitaryware Ltd.
- Amongst the largest player in the organized segment in it’s sector commanding a sizable market share (VIP Industries too is one of the largest player in the organized luggage market)
- The name of the brand is almost there for you to see everyday.
- You buy the products once and then probably don’t replace the same for at least 7-8 years (well this was actually a concern for me that replacement is not frequent, however it’s the same with luggage. You buy a VIP suitcase or strolley and then probably don’t replace it with a new one for many years)
- 3-4 such products in every family (3-4 luggages in every family)
This was about similarity between the businesses and brand equity of Cera Sanitaryware Ltd and VIP Industries. Now some differences
- Cera Sanitaryware Ltd commands a very low market capitalization i.e. 1/10th of the market capitalization commanded by VIP Industries
- VIP Industries is currently quoting a market capitalization of 3 times it’s annual turnover while Cera is commanding a market capitalization which is marginally less than it’s annual turnover (A definite opportunity of re-rating)
- VIP Indsutries is currently quoting at 30 times it’s annual profits while Cera is quoting at approximately 8 times it’s annual profits.
- There’s a major institutional ownership in VIP Industries and most importantly the roaring bull Rakesh Jhunjhunwala holds 6.4% stake in the company while Cera is devoid of any institutional ownership (Well Retail investors are always at an advantage in comparison to institutions, provided they harness the same).
Disclaimer: Well many of you reading this may not agree with my above comparison, however I have every reason to be bullish on Cera as I am personally invested and all our members of Alpha and Alpha Plus Portfolio are invested in the same since Rs 160-180.
Also, I am keeping my fingers crosses as I have been strongly recommending the same to all those who have been touching base with me.
Ekansh Mittal [firstname.lastname@example.org]