Hello Sir,

Hope you are doing well.

Yesterday, we released our new stock recommendation for our Alpha and Alpha + Members and would like to share with you details on the same.

It’s a leading company from the Building Products segment. Company’s main growth and profit driving segment has grown more than 10x in terms of sales and profit in the last 10 years.

Based on our research and the details shared by the management, we believe there’s a strong likelihood of

  • Company scaling up beyond Rs 1,000 crore sales and
  • More than doubling its profit in the next 3 years

The stock is currently trading around 2 + times sales.

 

Key points about the company:

  • 30 years + old company and the largest in its main business segment in India
  • Growing market – The segment in which the company operates is expected to record 6% + volume CAGR in US over the next few years
  • Growth – Main business segment has grown more than 10x and EBIT 13x since FY 14
  • Capacity addition – Sometime back, company more than doubled its capacity and even now there’s good headroom for the capacity utilization to increase
  • Technology upgrade – Company is working on technology upgrade to introduce innovative products with potential for 20% higher realization
  • Balance sheet – In the last 12-18 months, the company has reduced debt on the balance sheet by around 100 crore

Normally, we don’t like to project numbers 3-4 years down the line. However, based on what the management has shared and our assumptions, we believe the company has the potential to cross Rs 1,000 crore sales mark in the next 3 years.

Further, assuming different EBITDA margin scenarios, there’s a good chance of company doubling its profit or even higher in the next 3 years.

 

You can get this new recommendation along with other recommendations, by subscribing HERE

 

Risks – Our investment thesis incorporates assumptions about growth; if the demand doesn’t grow at the expected rate or if the cut-throat competition results in price wars, the company might end up reporting lower numbers than our expectations.

We have assumed exit multiples in the range of 15-25. In case the market attributes lower valuations to the business, the returns can be lower than expectation.

 

(End)

Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/

 

SEBI Research Analyst Registration No. INH100001690
Research Analyst Details
Name: Ekansh Mittal     Email Id: [email protected]    Ph: +91 727 5050062

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Disclaimer: http://www.katalystwealth.com (here in referred to as Katalyst Wealth) is the domain owned by Ekansh Mittal. Mr. Ekansh Mittal is the sole proprietor of Mittal Consulting and offers independent equity research services to investors on subscription basis. SEBI (Research Analyst) Regulations 2014, Registration No. INH100001690

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“Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors”.

“Investment in securities market are subject to market risks. Read all the related documents carefully before investing.”

The views expressed are based solely on information available publicly and believed to be true.

Investors are advised to independently evaluate the market conditions/risks involved before making any investment decision.

This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Ekansh Mittal/Mittal Consulting/Katalyst Wealth is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Ekansh Mittal or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Neither Ekansh Mittal, nor its employees, agents nor representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. Ekansh Mittal/Mittal Consulting or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement.

The recipients of this report should rely on their own investigations. Ekansh Mittal/Mittal Consulting and/or its affiliates and/or employees may have interests/ positions, financial or otherwise in the securities mentioned in this report. Mittal Consulting has incorporated adequate disclosures in this document. This should, however, not be treated as endorsement of the views expressed in the report.

We submit that no material disciplinary action has been taken on Ekansh Mittal by any regulatory authority impacting Equity Research Analysis.

Disclaimer: You can access it here – LINK

Whether the research analyst or research entity or his associate or his relative has any financial interest in the subject company/companies and the nature of such financial interest – No

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