Mirza International - a family run shoes/apparels business with RedTape like brand in kitty and consistent revenue and profit growth for last 10 years.
Some of the numbers given below -
CMP: Rs. 34.00
Market Cap: Rs. 315.18 Crores
Book Value: Rs. 29.75
Stock P/E: 6.42
Dividend Yield: 1.47%
Debt to equity: 0.61
PEG Ratio: 0.18
Promoter holding: 65.97% (no pledging)
FY13 export %: 66.56%
Avg ROCE 3Years: 25.66%
Avg ROCE 5Years: 24.41%
Avg ROCE 10Years: 22.53%
The stock has been laggard on the market for last few years and has recently broken out above Rs 26-27 on weekly chart.
Since breakout, it has had a steep run up to 33-35 range. (Some big investor entered the stock after breakout)
One negative point I noticed though is the contingent liability. Specially the counter guarantee given by company to it’s directors against their gurantee.
Company’s 2013 AR mentions “COUNTER GUARANTEE - Given by the Company to its directors against their guarantee” of Rs 339Cr.!!!
My understanding of this statement of Counter guarantee is that the company has given guarantee on behalf of it’s directors - pls correct me if I am wrong here.
If I am right, Rs 339 Cr is a mammoth guarantee for a company with market cap Rs 315Cr - that too given to directors!
Anyone has idea if such kind of guarantees are normal practice or does it indicate potential corporate governance issues?
Except this confusion regarding contingent liability, the company looks good. Any other negative points I am missing here?
Disclosures: I have invested a small amount (more than a token investment though!) in this company so my views might be biased.