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Friday, 5 January 2018

Bhageria Industries 25% returns in 2018

Bhageria Industries Ltd NSE: BHAGERIA,


CMP: 274, Target 25%, P/e 14, P/Bv 3.8, ROE% 43, OPM% 18.5, D/E 0.85, Sales Growth 15%, NPM 13%, M.Cap/sales 1.4, Market cap 437.55 (Cr.)



Technicals:

* Volume Breakout
* Consolidation Breakout
* Trendline breakout
*  Trend reversal


Fundamentals:


About Business :

Bhageria Dye Chem manufactures dyes and dye intermediates and trades agro chemicals, pigments and various pharmaceutical ingredients. The company has its factory in Vapi (Gujarat). Bhageria Dye Chem generates around 80 per cent of its revenue from manufacture of dye and dye intermediates, and the remaining 20 per cent from trading activities.
Domestically, the products are sold in Gujarat and Maharashtra. The day-to-day operations are managed by Mr. Suresh Bhageria and Mr. Vinod Bhageria & currently it is smartly operated with only 19 employees on permanent payroll.

Key Points:  

  • Company diversifying the business and installed solar power plant
  • Average OPM of 5 years is at 10.5% compared to that current OPM is at 18.77% which shows over the period management has been working over increasing their OPM.
  • Current ROCE is higher than price being paid for companies earning that is ROCE 37.92 is greater than price to earning that is 7.36.
  •  Current ratio is above it's 5 years average which shows company's abilities pay offs of their short term liablities have deteriorated.
  • Quick ratio is above it's 5 years average which shows company's abilities pay offs of their short term liablities with liquid assets have remains same.
  • Price to Book value ratio shows company is overvalued.
  • Market capitalization to sales ratio is at 1.31 which is sign of undervalued company.
  • Net Profit Yield of the company has at par @ 6.89.
  • Company is able constantly maintain their return on net worth 5 years average is 39.47 compared to return on net worth is 46.09.
  • Promoter's have extensive industry experience in the chemical industry. 
  •  Diversified in Bulk chemicals & Specialty chemicals ie, Intermediaries for Dye Manufacturing.
  •  Increasing exports hence the quality control of manufacturing is visible.
  • The technology for producing bulk Dye chem can be easily available & there are multiple way to manufacture it.
  • Environmental hazards with chemicals & Worker safety is always a major concern for the business.
  • Capacity utilization of factory is fluctuated because of the demand supply of Dye Chemicals from the industry hence the cost control is a tricky & requires experience to be managed.
  • Volatile demand of Chemicals specially H. Acid resulting cyclical turnover for the business.





Conclusion:

With strong fundamentals and excellent financial position with good management, Bhageria Industries is a good pick for 25% and above for the time frame of 1 year.

NOTE: We are not SEBI registered and above is buy idea for Educational purpose only. Pls contact your financial advisor.

 

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