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Saturday, June 15, 2013

Acrysil Ltd:-One of my high conviction small cap hidden gem idea

Stock idea:-

Scripscan:Acrysil Ltd
Bse code:524091
Duration:6-9 Months
Return percentage:35%

Story:Hawkins and TTK Prestige were gigantic multibaggers of the past few years.Yet at valuations of 30 odd, people clamour for  further northwards movement.While am not sure of the vindication ,I definitely can say the one which got picked today posses all the ingredients to follow suit of the mentioned multibaggers duo.Read on to know more about it.

Business:Acrysil ltd manufactures and sells kitchen sinks/centers(installed capacity of manufacturing 2,20,00 sinks per annum). It offers granite sinks, stainless steel sinks, and Vetro Inox sinks, as well as faucets and food waste disposers. The company exports its products to approximately 30 countries, including the United States, France, the United Kingdom,Greece as well as various European markets, Far East, Gulf countries.The company started through a technical collaboration with Schock & Co of Germany(it owns 10.15% stake in acrysil) which is a leading decorative mouldings company in the world.The company has been predominantly an exporter with more than 75% of its revenues coming from exports.But now the management has started putting much thrust on the domestic markets.Acrysil has also entered into manufacturing of stainless steel kitchen sinks to cater to the domestic market, through its subsidiary Acrysil Steel Private Limited.

Why to buy:From launching more kitchen based products to expanding new geographical areas,the company is doing everything possible to catapult itself in the top global league.Its probably the only company in Asia to have such an unique business model.Now one may question what is unique or different in a mere kitchen sink company?The uniqueness lies on its products which are made from 75-80% mineral Quartz, cast by means of a special computer controlled polymerization casting process, making it ideal for designers and home owners to perfectly fit in versatility with functional attributes of a smooth and a hard-working kitchen sink.These exquisite Kitchen sink of rock hard material in beautiful colours look great, are simple to clean and reveal nothing but lasting beauty that can resist scratches and safe in contact with food.With higher disposable income and luxury "show offs", people are getting more fashionable in  way of living.Bang on-There's the potential of this 40crs marketcap company.

Results:Acrysil ended fy12-13 on a great note.Consolidated Sales went up to 80crs from 62crs(fy11-12) while PAT jumped to 4.8crs from 1.6crs(fy11-12).On an equity of 4.4crs- EPS stood at around 11rs.The management of acrysil has guided a growth of 30-35% in both topline as well as bottomline for the present financial year. At present price of around 100 bucks,its trading at a forward multiple of 6.6 times on its expected fy14 earning per share of 15rs.

Conclusion:Its getting increasingly tougher to find saplings of the oak tree in the small cap fraternity as in most cases corporate governance is not in vogue.From corporate malpractices to siphoning of funds,its getting bad to worse.Acrysil is one such counter which has really pleased me.Not only it hinted about its business confidence by issuing a liberal bonus but also it has been consistent in its high dividend policy for the last several years,even when it posted flat numbers.The company should deliver 15rs earning for this financial year.Assigning a PE multiple of 9(historical average been 7-12 for the last few years)helps me in arriving at a price target of 135 bucks within the coming three quarters.The company with increasing revenues and higher profits well stand a chance to quote even at higher multiples,as people fancy unique business model with high growth potential.Not to forget its dividend yield of 3 odd%.Go for it folks.

btw:The company falls under the "Call Auction" category.Volumes are a big issue here.Cant sacrifice a quality company just for Sebi's eccentric acts.People looking for midcap/smallcap positional call professional service may rush a mail at my mail id to know more about it.


Unknown said...

Excellent call on Acrysil...could the stock price follow La Opala RG?

Equity wealth said...

No idea about it.This too much movement is such a short notice scares me.Though seeing huge profit in a good counter is a good feeling but still slow moves is wht i prefer

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