Hawkins Cookers : Is growth coming back?


(Manish Vachhani) #261

I think with the increase in discounts and advertising, they have put up a decent top line growth. If they can maintain this momentum going forward, with the slight tailwind, the bottom line growth will follow. I feel “Achhe Din Aane Wale Hai.”

Discl: Invested.


(Vaibhav Patni) #262

Interesting 35% sale on snapdeal. What makes it more interesting for me is Big disclaimer, “NOT APPLICABLE ON HAWKINS”

http://www.snapdeal.com/products/home-kitchen-cookware-bakeware/?&


(Navtej Singh) #263

With monsoon not playing their part … I guess we will see a fall in sales for cookware items, specially in the north part of India. I guess we may see a 5-10% fall in total sales.


(Ramesh kumar) #264

Q1/FY15 results out !!!

Sales PAT EPS

Q1 15 97.2 70.7 13.37

Q1 14 75.3 48.9 9.25

Inc/Dec% 29 45 45


#265

Thanks Ramesh…Seems Super!Waiting eagerly for the 2014 AR to judge whether it’s a norm or an aberration.Hats off to “The Hitesh Bhai”.

Disc : Holding from Lower Levels and not looking forward to add at this Price


(Amitayu) #266

Hi

Does anybody have any idea why hawkins fell 10% today ? Should i hold or will exit ?

Discl: Invested on Rs 3270.


(Nikhil Rodrigues) #267

It’s effect of AGM. Management did not come up with clear answers on new products and growth. They just said you will know about products when they are ready. They said they will gear up for demand whenever it comes but did not throw any light on current happenings.

Plus chairman’s speech indicated that Q2 FY15 will be 8-10% sales growth. So overall expectations of 20% sales growth for FY15 have to be lowered now. They might do 13-15% sales growth for entire year with EPS of 90.

Overall don’t expect fireworks. If you see better opportunity elsewhere, move out. But otherwise it’s not bad for long term holding.


(Amitayu) #268

Hi Nikhil and other seniors

I am willing to hold Hawkins next 4 to 5 years. I am expecting a descent return from like 3 bagger in the mentioned time period as economy is picking up. Is my expectation corect? Please advise.


(Nikhil Rodrigues) #269

Amitayu,

I am invested in Hawkins but might decide to move out for better opportunity. So please consider my views from that angle.

Assuming Hawkins does EPS of 90 for FY15, next 2-3 years depend on overall demand for cookers and cookware. Which needs picking up of Indian economy. Now markets are already pricing in overall improvement in GDP growth rate so lets assume it happens in next 2-3 years. In that case, Hawkins should be able to grow sales at 15-20%. The operating leverage will make profits grow at 20-25%. If it launches new products like induction cooktops and other kitchenware, the growth will be better. Hawkins also pays chunk of profits as dividends.

So overall it’s okay to hold if your view is 3-4 years. You will make decent returns. But don’t expect 25% CAGR for granted. If you manage to find another stock which can give you 25% for sure, make the choice. Hawkins is little downside, reasonable upside, good dividend play. Not a fast growth multibagger.


(Gautham U) #270

I dont understand why we keep assuming limited downside and huge upside for Hawkins. Even after the 10% correction, the yield is <2%. P/E is still above 40. And remember the last q numbers looked impressive because of a very low base. God only knows when the new products will be launched. Even if they do, will it be a game changer?. Talking about induction cooker, its an overcrowded market. ( i have seen some companies giving it free with cookers etc. ). I myself have an local induction cooktop (given by a relative). I have been regularly using for 4 years and never faced any issue. As for existing products, we all know their cooker is the best in terms of quality. But prestige ( though not as good) has also captured the mind share and a very dominant player. I am not sure of the futura tawa. Last year I bought one ( as a proud shareholder), and it started giving problems a couple of months ago. I was actually surprised because so much is written about hawkins perfection. May be we didnt use it the right way or that’s the way it is.


(Nikhil Rodrigues) #271

Hi Gautham,

Hawkins is not huge upside but reasonable upside stock. It was never valued on PE but always the dividend. TTK Prestige valuations also come into picture when valuing Hawkins. TTK is trading at PE of 46 with 0.5% yield. And it showed negative sales & profit growth for last 1 year.

Market is not valuing these or any stocks on trailing earnings today. It’s expecting economic recovery and resulting sales/profit growth.

The new product launches if they come might not make huge impact. But for small cap like Hawkins, even 50-100 Cr incremental sales is great.


(PRASAD V. K.) #272

Companies like hawkins are generaly valued as brands and not 8% growth,10%,15% or 25%.

They are generaly valued on the basis of what a aquirer is likely to pay to buy a strong brand like hawkins catering evergrowing buying power of India.Regarding AGM asking questions regarding future plans,new product launch and sales growth is ok but holding management to ransom and selling hawkins stock to punish them is not going to help any cause.We must understand that this management is super consevative and is unlikely to launch any new product unless they are sure about quality,long term supply and quality

measures are in place.It is very important for small retail investors before selling hawkins to answer one question IS THERE ANY BETTER STOCK?

I hold hawkins in my very few stock portfolio and on my own conviction and not borrowed one.


(Hitesh Patel) #273

For Hawkins I think investors need to be very very patient. The good part about it is that one can put a heavy dose of capital to work here. There is little about the business that is unknown except the demand scenario and the new product launches.

So for this business variables come down drastically. As with all businesses the demand scenario will keep on fluctuating. First quarter has been very good albeit on a low base. But compared to ttk prestige the hawkins results have been quite encouraging.

Now from what management commented in AGM people are guessing the q2 figures and adjusting the full year figures. I think out of four quarters of the year there could be a single quarter which could be lacklustre. (that happens with many companies) How the whole year pans out needs to be seen. The good part of the equation here is that management now will not have too much problems in supplying goods if demand were to rise. And all the incremental demand (if and when it comes about) would lead to much higher profits.

I feel one needs to take into account the larger picture without making too much of minor details about management arrogance or quarterly blips.

Personally I remain bullish and remain invested.


(samir s) #274

has anybody received discount coupons ? when we supposed to receive it?


(Raj) #275

Hi Samir,

The discount coupan was received morethan a month back. Now everybody is waiting for the result on 11th :slight_smile:

Regards,

Raj


(A. King) #276

Is there a discussion thread on TTK, Hawkins Vs Gandhimath? They also seem to make pressure cookers.


(Ramesh kumar) #277

Q2/FY15 results out !!!

Sales PAT EPS

Q2 15 147 12.3 23.3

Q2 14 128 13.7 26

Inc/(-)Dec% 14.8 -10.2 -10.2

HY15 245 19.4 36.7

HY14 204 18.6 35.2

Inc/Dec% 20 4.3 4.3


#278

Online retail trend caught up with this sleeping beauty as well. To my surprise they have quietly launched e-commerce module on their website.


(Varadharajan Ragunathan) #279

After seeing Basant maheshwari recommend this in outlook business, had a deep dive into it. Looked through all AR’s, this entire thread and I am not able to see why hawkins deserves such a big mutiple.

they neither have new products in the pipeline - induction, cookware, flasks,water purifiers, juicers all of which TTK has launched making it the HLL of the kitchenware segment where hawkins seems to be a one trick pony which is now surrounded by competition of all kinds in the cooker arena.

With the benefit of hindsight the management was patriating back 80% of the profits out of the business and created no capacity since 1997 - that basically means, they were reluctant to change and did’nt want to do anything to be innovative - neither new products or product categories. Sort of like nokia missing the smart phone revolution.

Butterfly IMHO looks a much better bet - at least they are growing although I know for a fact that they have big receivable issue because of the TN government order.

IMHO, hawkins is the classic case of “crowding behaviour” extrapolating the past for the future and the management obdurately refusing to do anything. I have seen this with so many “conservative” companies like TVS motors (which was ahead of hero honda in the 1990s and was left for the dead with the four stroke revolution).

On the basis of :

)- FCF yield - which is only 2-3%

)- PEG which is 0.2 or 0.3 whichever way you look at it

)- head room for growth - cookers is more penetrated than say premium underwear or air coolers or wellness creams (zydus) and hence ability to grow explosively. In any case, now there is a lot lot more regional competition - glenn, sun flame, preethi, butterfly are names that I know, given the high capital return ratios in this space.

This looks like a “hope” stock to me and we have people who are holding onto it getting excited for “dead cat bounces” of 5-10% EPS growth.

I am not able to see what category this fits in at all - quite ironic that basant maheshwari who talks about the 30-40% growth stocks is recommending a 10-15% growth stock with increasingly reducing head room for growth.

I am just not able to see how there could ever be a 25-40% EPS growth in this in the next 2-3 years.

As always, welcome counter views


(harsha devulapalli) #280

Varada,

Even basant expects hawkins to do only 10-15% growth. Since his is a super concentrated portfolio he has hawkins to cover for adverse situations by virtue of its dividend yield. Also in his interviews he maintains that hawkins and TTK are a duopoly. The other companies do not even sell 10% of what hawkins or TTK sell.

They do have induction cooktops in pipeline but the management is too conservative and lethargic in launching new products quicker. They take forever for new launches.