I guess the distinction with Nestle would be that Nestle would have the cash balances to fund expansions. So its all through internally available funds.
With Manjushree …the key risk factor is they are expanding via debt. The serviceability and size of debt is going to be a key factor to monitor in this company.
I was also pleasantly surprised to find promoters buying at these levels. Certainly helps soothe some nerves.
But as I said earlier - Debt levels and need to expand capacity are the key things that I am tracking for this company.
I’m no expert but what I understand is, Capacity addition leads to economies of scale, greater profit margins and hence higher ROCE. Profits when reinvested will keep financial leverage low and hence, can withstand shocks that much better.
Just my 2 cents: Some times we just can’t go by the financials and current valuations. I committed this mistake multiple times and didn’t buy Eicher Motors at Rs 500/600 range … I committed similar mistake again in selling Mayur Uniq by selling early (Sep. 2013)thinking that valuations are rich, even though I was clear in my buying thesis (Feb 2010). Made same mistake in TTK Prestige by selling at Rs 475, even though I bought around Rs 300. Glad that I quickly realized my mistake and doubled-down and bought more at Rs 550. (ultimately selling out entire holdings when the initial signs of tapering-off growth)
Sharing my experience: At least I resisted my temptations in case of Manjushree. I first bought Manjushree on 15th Dec 2008 at Rs 10.75 based on macro economic trends (packaging industry growth due to organized retail), the industries it serves and some trust on Management. Kept buying till March 24th 2008 almost every day, but sold bunch on 24th at Rs 14.95 thinking that, it was getting ahead of fundamentals. I realized my mistake and bought back more regularly till Jan 2010 (at Rs 53.40). By then I invested close to 40% of my funds in Munjushree.
It really tested my patience between Oct 2010 to June 2013. It hardly moved … since the companyperformance was in line with my expectations, I just stayed put.Though I sold some in March 2011 to balance my portfolio, I managed to hold close to 50% of my total holdings till now. I’m very happy that it turned-out well.
My lessons learnt is we may miss-out on many opportunities, but if we could invest big and hold-on longer, few winners will compensate for the mistakes and generate wealth.
Thanks for sharing your experiences. Can you elaborate more on your selling of TTK? How/when did you decide that the tapering is for real and not a temp. bad phase? I’m invested in Page which is one stock where such learning will be useful to know.
Fantastic success story. If you remember we met in December last year when you were in Bangalore and you did speak about Manjushree. I was ignorant and did not look into it seriously after you left, mainly because of the business model and the debt. One more lesson learnt.
As you all know TTK is a strong brand in South India. I grew-up watching TTK cooker and Butterfly stove in our kitchen. Both of them were known for quality and durability those days. But in the interest of expanding in non-South markets the management didn’t do a good job in building the brand loyalty first in those markets, rather they channel stuffed the products from China. The quality suffered in this process … since non-South markets didn’t have much affinity towards the brand, the dissatisfied customers didn’t return back. At the same time in their home turf after AIDMK govt’s free scheme, TTK couldn’t grow due to lack of demand. These factors made me decide to exit … I sold entire stake on 3rd May 2012. I just kept 10 shares to monitor the price ( as a reminder if I was wrong).
Pls note that I had my fair share of mistakes also. Ex: Polyplex, Wockhardt etc., But I exited decisively, in case of Wockhardt I had invested 10% my portfolio. But sold at 80% loss.
I don’t think any global beverage giants will be getting into this business. Its not their core business. They generally look for reliable supplier/partners. As you may know Coke doesn’t even own most of their bottling plants/operations. So they wouldn’t be interested in bottle manufacturers.
If at all there’s an interested party, it would be a global packaging company. But I don’t think current promoters will sell the company.
Thanks for the insight, Lokesh. Looks like for most of these high growth rich valuation stocks, structural changes to the business model are the things to watch out for.
There is a board meeting today for voluntary delisting proposal consideration as per news from money control website. I feel the stock is very much undervalued. Any thoughts on valuation, shareholding etc. can any seniors guide please.
This stock was doing great recently and appreciated a lot. The last quarter numbers were bad and the price tanked and now we have this delisting proposal. Is everything right here or it was a preparation for delisting?
Manjushree has won four India Star Awards for the year 2013-14. Manjushree won the awards for four of its packaging innovations provided to leading companies, Coca-Cola, United Spirits Limted, Nambisansâ and Himalaya. The company won the awards under the category of âConsumer Packaged Product Designâ.
The 2 litre liquor PET Bottle with Handle was developed by Manjushree Technopack for United Spirits Limited as a party pack for retail sales. The 2 litre pack is a breakthrough innovation in large size liquor packaging. The uniqueness of the bottle lies in the external handle that aids easy dispensing and the 100% tamper proof Guala cap closure fitment, making it first of its kind packaging in the world. This unbreakable lightweight PET pack is easy to lift, easy to pour and very consumer friendly.
