Story:DHP India Limited engages in the manufacture and sale of low pressure regulators for liquefied petroleum gas (LPG) cylinders, and related accessories and parts in India. Its products include propane regulators, butane regulators, LPG regulators, hose assemblies, and brass fittings. The company also exports its products.The Registered Office of the Company is situated in Kolkata & its Factory is situated in Howrah District, West Bengal.
This is an interesting microcap with good potential.The company has been pretty consistent in its numbers over the last several quarters.Its a mere 10crs mcap company having an equity base of just 3crs.It hails from our part of the world and once am out of this present bedridden restrictions,a management meet seems very on.Promoter owns 75% stake resulting in negligible volumes in the bourses.Its a herculean task to pen analysis about this unknown unheard counters.There's just no detail to work over.Even after meeting the managements if details are put on which are not in public domain,controversies may arise.It has happened in past and chances remain loads of getting it repeated once again.Anyways would still try to dig in details.
DHP has increased its sales from 12crs to 25crs in the last five years.Net profit in the same period vaulted five times to 3.5crs from just 70 lakhs.This can be attributed to its decision of manufacturing its products from trading previously.Presently it boasts of a superb net margin of 14% compared to 5-6% what its used to enjoy earlier.The Company presently has shifted the main focus of its manufacturing business from domestic market to the export markets and is pretty confident of obtaining satisfactory orders in the coming years.
I had the opportunity to interact with a few client of this company.Feedback received can be defined remarkable,they vouched for its world class product quality at much affordable prices.Can the company scale up remains the million$ question.Balance sheet is squeaky clean.Networth stands tall at 16crs with debts of less than 2crs, allowing it to go for fresh debts,in case it plans to expand big.Industry is fragmented though, with the company facing stiff competitions from superior vendors.Its too premature to suggest it a buy as lot of questions are in mind.On a prime facie it looks in better shape than a lot of other inferior microcaps.Volumes are too less,so any bulk buying or selling can make it move either ways bigtime.Growing consumption of low pressure regulators & gas realted products coupled with immense potential for LPG appliances makes the stock worth a look.I am not assigning any fat targets but downside seems very minimal from the present prices.
Source:With inputs from gareebequityanalyst.