Market outlook and stock tip:-La Opala RG Ltd(Saturday, June 3, 2012)
Scripscan:La Opala RG Ltd
Target:216rs(raised from 176)
Story:La Opala RG Ltd promoted by Mr. Sushil Jhunjhunwala and Mr. Ajit Jhunjhunwala, is in the business of manufacturing of Opalware and Crystalware products. La Opala started manufacturing Crystalware in the year 1996, sourcing the exclusive right to use the technical know-how, information, data for the manufacture and sale of Crystalware in India and abroad from Doosan Glass of South Korea, a leading manufacturer of Crystalware globally.La Opala has manufacturing units in Madhupur (Jharkand) and Sitarganj (Uttarakhand).La Opala is at present the largest domestic manufacturer of opal glassware, with the company commanding a 40% share of the opal segment.The company’s opal ware products primarily comprise dinner sets, cup saucer sets, coffee mugs, coffee cups, tea sets, soup sets,pudding and desert sets; and crystal ware products consist of barware, vases, bowls, and ashtrays.It would be prudent to note that even Rashtrapati Bhavan uses La Opala crockery.For a country like India the company’s main business is into Opalware and Glassware where organized market share is just Rs 500 crore.Its pretty certain international players like Luminarc from France and Corelle from the US eyeing a pie in India would definitely target companies like La Opala.The company has a wide range of opalware and crystalware products selling under established brands. The company also exports its products to more than 30 countries. It has products spread across the value chain. Diva and Crystal - its high-end brands contribute more than half of the total revenues. The La Opala brand caters to the mass market. The company's 100-strong distributor network for La Opala covers all major towns of the country. It also channelises its products through modern retail stores.There are 10,000 retail touch points through which the products of La Opala are sold.The company's revenue have doubled over the past five years.Its operating profit margin has been growing steadily since the past four quarters. Exports contribute around one-fourth of the company's total turnover.La Opala RG net profit rose 28.11% to Rs 3.19 crore in the quarter ended March 2012 as against Rs 2.49 crore during the previous quarter ended March 2011. Sales rose 22.04% to Rs 29.84 crore in the quarter ended March 2012 as against Rs 24.45 crore during the previous quarter ended March 2011.For the Audited full year,net profit rose 35.19% to Rs 12.60 crore in the year ended March 2012 as against Rs 9.32 crore during the previous year ended March 2011. Sales rose 19.62% to Rs 112.62 crore in the year ended March 2012 as against Rs 94.15 crore during the previous year ended March 2011.The company has recently increased its manufacturing capacity to 12,580 metric tonnes. The same will boost the company's sales further in the present fiscal.La opala should comfortably cross 150-155crs sales in the current year.PAT should come in the range of 17.5-19crs.The stock is trading at around 6 times its expected fy13 earnings of 17.3-18 rs.Given its track record and sound financials, the company should attract higher PE multiples in the next couple of quarters.Putting a modest PE multiple of 12 helps me in getting a target of 216rs.The promoters own 67% stake in the company and may well hike it going forward.Sushil Jhunjhunwala(Managing director) is a pretty cool visionary man who seems to be committed to make much shareholders wealth in the coming years.La Opala RG is into a very niche segment which has tremendous potential.The brands of the company would do wonders as its a household name in the country(Even it has find its place in my house).At 100 odd crs marketcap, I do get a lot of comfort in the counter.There's no equity dilution in near future which convinces me of the inevitable re-rating which can take place at any point of time.With comfortable debt-equity and other healthy ratios added up with the niche business model,its ought to catch investor fancy sooner or later.It also pays a dividend of couple of bucks.Altogether an unique bet which can mint money for you folks.Go for this "Indian consumption" story.
Todays update:Within the mentioned duration,the company has hit the 105% return target of 216rs and looks good for even more.Enjoy the ride members.btw:People looking for midcap/smallcap positional call professional service may rush a mail at my mail id
email@example.com to know more about it.