I would like to initiate conversation on a company called G. M .Breweries.It isis engaged in the activities of manufacturing and marketing of Alcoholic Beverages; such as Country Liquor (CL) and Indian made Foreign Liquor (IMFL).GM Breweries is in the Breweries & Distilleries sector. The current market capitalisation stands at Rs 110.57 crore.The company has reported a standalone sales of Rs 74.99 crore and a Net Profit of Rs 6.04 crore for the quarter ended Mar 2014.
The Market Cap of the Company is about 110 cr while Book value is about 122 cr.
The Company is trading at a PE multiple of 5.14 while the PE multiple of therelated industry is about 12 times more.
The Company has recently proposed 25 % dividend & will also consider issue if bonus shares.
The company has shown steady profit growth for last couple of years.
Debt is negligible.
Financial Results:last fin year
Gross Sales= 97,628.30 Rs .in Lacs
Net Sales= 28,864.04 Rs. in lacs
Profit before depreciation & taxation= 3721.86 Rs. in Lacs
Profit after taxation= 2,149.68 Rs. in Lacs
Add: Balance brought forward from previous year=3,245.23
Surplus available for appropriation= 5,394.91 Rs. in Lacs
The company shows high profit earn capability and most attractively valued with in its industry.
Quality of Management is not known;but promoter stake is quite high about 74%.
I do not see any reason why this Cash-rich & growing company should be available at this price.
To me it seems the stock is undervalued yet to realize its true potential.I differ with Mr. Market on this stock.