One of the special situation I am watching out and invested a small capital is Shalimar Paints. Hella Infra market has acquired around 25% stake in Shalimar paints for 270 crores. The money that will come will mostly be used to reduce debt, working capital and expansion. Today, Mr. Souvik had been appointed on the board of Shalimar Paints who also heads Finance and_ Investor Relations at Infra.Market.
Positives
- Shalimar paints is a very popular and old brand. Most people do know about the brand.
- Infra Market is an online procurement marketplace that offers construction materials and products to build projects. It is backed by the likes of Tiger global.
- This strategic investment should be able to expand the reach of Shalimar paints and will also provide enough capital to expand.
- They are targeting around 1500 crores of revenue(current revenue ~ 300 crs) with 8-10% EBIDTA margin in next 3-4 years. Even if they can achieve 1000 crs of revenue with 8-10% margins, it would be a great turnaround.
Challenges:
- Paint market is becoming very competitive with the entry of Birla and JSW.
- High oil prices
- The company has been making loss for last 5-6 years
Investor presentation - https://www.bseindia.com/xml-data/corpfiling/AttachHis/d8296997-de3c-4798-9921-c29ef84ac051.pdf
Recent concall: Shalimar Paints Earnings Call for Q3FY22 - YouTube