Lloyd Electric has been growing steadily over the last several qtrs., gaining substantial market share in the process. From a market share of about 8% of the Indian room AC market about 2 years ago, it has taken it up to about 14%. This is huge, particularly considering the fact that this market share increase has come at the expense of established brands like Daikin, Voltas, Hitachi, Godrej etc.
The stock has gone up 6 times in the last 3 years, but continues to be available at a multiple of under 10 for FY 16-17. It is pertinent to note that this growth in market cap has been purely on the basis of earnings growth with almost no re-rating premium having been accorded to the stock. With it’s ever increasing market share, it is only a matter of time before before that happens. The Co. has disclosed its intention to restructure its business, which could be the trigger. A hive off its subsidiaries into another Co., could mean substantial de-leveraging of its balance sheet leading to a marked improvement to it’s return ratios.
Disc: Invested & adding at current levels.