Hi,
Stock: Nilkaml.CMP )- 288
Picking up from other thread, Would like to discuss on a Plastic/Furniture company - Nilkamal in Consumer Space.
During last consumer boom period form 2009 - 2014, we have seen some unnoticed companies like Hawkins, Prestige, La opala, Supreme Ind, VIP Ind have become fancy of the markets. And many FMCG companies has also given multibagger returns.
I feel now the time has come for some left over companies like Nilkamal & Wimplast. Both I teat on the lines of Prestige and Hawkins.
Today’s focus is on Nilkamal.
Nilkamal is the superior brand name and much larger the WImplast in comparison but still lagging behind in PE and Market cap.
Nilkamal was facing problems due to its retail division @ Home and which was in losses till now, and turned into profits this year. This was mainly due to Interiors come into Discretionary spending nature rather than a need.But times are changing and Indian consumers are moving towards Next level and high spends are expected in this segment.
The company is into Several segments -Moulded Furniture,Material Handling,Mattress,@home, and Home ideas.
Today VP blog also recommended this company again. I am reproducing the same below.
The brand a Nilkamala is familiar to everyone and it is the worldas largestmoulded furniture maker and Asia’s largest plastic processor.Company operating through five different divisions viz a Moulded Furniture,Material Handling,Mattress,@home, and Home ideas.Its manufacturing facilities are strategically located at each zones of our country .Company own seven factories in India and one in Sri Lanka. Under the moulded furniture division ,company manufacturing plastic moulded chairs , sofas ,ready to assemble furniture …etc .Its material handling division selling crates, pallets, Pallet Trucks ,Stackers, Forklifts …etc. Company is the market leader in each of these products.
What went against managements expectation was the performance of @home division.This division comprises 19 large format retail stores with an average size of 16,000 sq.ft. per store.Even after spending close to Rs.100 Cr for this division ,performance of this division was not up to the mark for a long time.Performance of this division affected companyas over all profitability and its share price.Now management took a decision to control spending for this division and concentrate in other core businesses.It is planning to spend Rs.50 Cr to start two manufacturing facilities for mattresses in next three years.At present company owns twomattress manufacturing facilities located at Bangalore and Kolkatta . Management is confident to achieve over Rs.100 Cr turnover from this division alone in this financial year (2014-14) itself. Mattress division is comparatively high margin one for the company .After a long wait , companyas @home division also came to profitability in previous financial year (2013-14) .In all other divisions company having enough capacity and hence not expecting substantial spending for capacity addition in near future . This situation will help the company to improve its cash flow and debt reduction going forward. Nilkamal Bito Storage Systems ( LinkHERE) , the joint venture company with BITO Langertechnic of Germany also reported profit in latest FY .Combro Nilkamal Pvt Ltd is another joint venture with US based Cambro Manufacturing Company ( Company ProfileHERE) .This joint venture company is operating in the field of commercial food service & hospitality segment which also reported good performance in FY 2013-14
All together ,this is the changing time in Nilkamal with managementas prudent decisions.Promoters holding about 63 % stake in this company and not a single share pledged. Company reported substantial improvement in its profitability in latest March quarter. For the full year, Company reported a consolidated top line of Rs.1752 Cr and a net profit of Rs 48 Cr . EPS for the year is Rs.32 .Company also declared a dividend of Rs.4 per share . Companyas book value is close to Rs.300 and currently trading even below this @ Rs.288.
Financials
Compounded Sales Growth
10 YEARS:
20.04%
5 YEARS:
15.66%
3 YEARS:
16.15%
TTM:
2.86%
CoCompounded Profit Growth
10 YEARS:
8.46%
5 YEARS:
22.83%
3 YEARS:
-16.31%
TTM:
28.34%
Return on Equity
10 YEARS:
13.81%
5 YEARS:
12.73%
3 YEARS:
12.85%
LAST YEAR:
7.48%
Negatives:
High Debt. Interest payment is higher than profits.
Need to track closely various divisions.
Discl: Have a tracking position
Views invited.