Saturday, July 23, 2011

ELDER HEALTHCARE - BUY







Elder Healthcare - Yes ,its name is bit confusing.Even if its name sounds like a pharma company ,FMCG/Personal Care is the correct sector in which it can be included.This company is part of 800 Cr Elder group which is well known in pharma sector through their another company
Elder pharmaceuticals.Company selling many products  comprises of OTC products in pain management, fairness segment , oral care, lip care ,burn categories, Men,s and Women's grooming ..etc..Many of these products are in-licensed products of reputed multinational brands .This means that the brand is not owned by the company but it is only  produced/distributed by the company. Such agreements always causing for thin margins for Elder .It is selling many international brands in India which includes - Tiger Balm, Blistex Lipcare balm,Essance Room Freshner,Fairone Fairness Cream,Neemtone Facewash,BeYu brand Cosmetics, Fuel deodorant body spray ..etc( For full product list click HERE). In recent times as a change in its business strategy, Elder Healthcare is reducing its dependency on in licensed products and starts to concentrating in building their own brands.
Dropping the sales of 'Tiger balm' and introduction of 'Octane' Brand deodorant is the best example of this changing strategy.Company is also planning many more new products its own. Effect of this strategy is clearly visible in March quarter result where company posted improved  margins for the first time in many years.In march quarter Company posted a turnover of Rs.39 Cr and a net profit of Rs.1.33 Cr where it posted just Rs.17 Cr sales and and a profit of 40 lakhs in the same period in last year.Now the management is planning to make it  a Rs.300 Cr company in two years and reduce the ratio of in licensed - own products from current level of 90:10 to 50:50.. Company having a small equity base of just 4 Cr and out of it 50 % is held by the promoters itself.In last full year Company posted a turnover of Rs.113 Cr,net profit of Rs. 1.74 Cr  and an EPS of Rs.4.35. On successful launch of own products like recently launched 'Octane' its margins will surely improve.All FMCG company's are posting healthy gains mainly due to the middle class spending story of India in recent times both in terms of turnover and share price.Elder healthcare is expected to show the same growth which shown in last quarter of the last financial year. If it happens there is good scope for sharp appreciation even from current level considering the small equity/low floating stock nature of this FMCG company.
CMP is Rs.145/-

 For latest interview of MD , Click HERE














13 comments :

  1. Don't you think it is over priced .

    P/E 33.79
    * Book Value 16.10
    * Price/Book 9.13

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  2. Higher P/E multiple is always indicating higher growth expectations.whether the company can meet such expectations or not is more important.I think higher P/E itself is not a reason to avoid any stock if there is good chance to growth which will eventually bring down P/E

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  3. Turnaround stories usually involve high P/Es at trough of their upmove

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  4. is ram ratna wires still a buy considering its performance

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  5. dear sir,
    pl post some scripts which are value bye from dividend point of view

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  6. My BUY rec on Ram Ratna Wire was @ Rs.48/- when its face value was Rs.10/- .Now the FV splitted to Rs.5 and share price is around Rs.51/- an appreciation of more than 100% .At CMP one can book profit.

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  7. If you are only looking for dividend , Bank FD is better at this higher rate

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  8. this company never paid any dividend?

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  9. Hi, Puneet Resins has increased a lot since your last recommendation. What are the targets for the same?

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  10. Rajvir Industries ltd. Your Reco was buy at Rs.165/- , Will it be good advise to Avg the Price at current level of 134-140/-? Please Advice

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  11. Dear VP,

    Looking at overall tobacco company's upward movement in stock price in last 3 months, e.g. Godfrey, VST industries. Do you think Pan Parag company i.e. Kothari Product also show the same bull run in near future based on strong fundamentals. Please let Us know your views.

    Regards,

    Satya

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  12. The debt to Equity ratio is more than 5. I think this is risky or you think they are managing this debt well!

    Kapil

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  13. Sir,
    Do you recommend to buy at 129 rupees currently trading.And also advise whether for short term or long term stock.

    ReplyDelete

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