Dear Hitesh, Dhwanil,
Thanks for your comments.
One of the shortcomings here is that we don’t have access to the management or their market estimates / projections, and thus, this is very much unlike Ajanta or Kaveri or Mayur or any other Valuepickr favorites. That being said, Fluidomat has increased sales by ~7x in the past 10 years, on the back of increasing price and/or volumes. I believe this trend might continue going forward. As far as I understand, the market opportunity is huge (we don’t know the exact numbers) - both in terms of new buyers (in India as well as abroad) as well as existing customers via repeat business.
Some might compare it to Hawkins…it’s just that unlike cookers, customers don’t exactly wait for 15-30 years before replacing/purchasing a fluid coupling :)Given the reasons highlighted above and in the earlier posts, I don’t think the stock is going to be hammered because of one or two bad quarters. Hawkins is one of the best examples of how stock stories survive despite what might seem to be a poor set of results to most investors. As long as the long term story stays intact and there is no fraud, there will be buyers, including the promoters (and yours truly) if at all a major fall happens.
The question is not whether they can increase the sales to 100 odd crores in 3 years - (my answer to that question is I don’t know)in fact, such questions are difficult to answer in case of most companies - the question is, could this investment make me adequate returns considering the other opportunities available in the market, and my answer is yes. I look at this opportunity in terms of different growth scenarios, and the opportunity is a modest compounder (inflation + few % points + dividends) if they do just about okay and a multibagger if they do well and get re-rated by the market.