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