Dear Investor,

A few days back we told you that we are working on some interesting stock investment opportunities and will share something good in the coming few days. 

Well, we are glad to inform you that we have released our new stock recommendation and hoping that it does well over the next few years for our Premium Members.

Our new recommendation belongs to the category of a “Big fish in a small but a growing pond”

It’s never easy to find Market Leaders in a growing industry with strong entry barriers at almost single digit PE.

Well, as investors our job is to unearth such companies, do a proper due-diligence, check if the future outlook is good, the barriers to entry are strong, the market size is growing and the company is on the growth path. If it is, then there’s no reason to not invest at such low valuations well before the other investors join the bandwagon.

Because by the time they do, the early investors would have already witnessed the benefit of both the earnings compounding and re-rating of valuations.

As mentioned above, 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:

Basic Details:

  • Segment Leader
  • Market Cap - < 1,500 crore
  • Enterprise Value - < 1,300 crore
  • Increase in Promoter Holding in the last 3 years – Yes
  • 6 Years Sales Growth – > 21% CAGR
  • 6 Years Operating Profit Growth – > 19% CAGR
  • 6 Years PAT growth – > 24% CAGR
  • Debt – Cash rich company
  • Valuations – Less than 10 times Pre-tax earnings

Key Reasons as to why we like the company: 

  • Company operates in a segment with strong barriers to entry and no wonder it’s a leading company in India while the 2nd largest player has an extremely small market share
  • Company is diversifying the revenue base with the launch of new products, which have higher growth potential
  • Company is eyeing entry into new markets including US with significantly bigger opportunity size
  • With the expected improvement in margins, we expect the company to record 17%-20% CAGR in earnings over the next 3 years
  • Last, but not the least, despite a decent track record, expectation of a strong double-digit growth and improving balance sheet, the stock is still 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 levels. We have also added the stock to our Model Portfolio.


Best Regards,

Ekansh Mittal
Research Analyst