Saturday, December 1, 2012
La-opala RG is a stock recommended twice in this blog once around Rs.60 and again @ Rs.165. Now repeating this stock third time @ Rs.190 . La-opala is a name to reckon with in the Indian organised crockery market and an undisputed leader in premium segment. Company also exporting its opal and glassware products to many countries.Recently company completed a major capacity expansion program in its Sitarganj Factory ( upto 100 % increase in production capacity of this unit ) which will start to contribute from this financial year onwards.With this expansion company is expecting to increase its export contribution from current 20% to 30% in total turnover. Company already owned another piece of land worth about Rs.20 Cr and management indicated this will be utilised in future for further expansion.Government’s decision to impose anti dumping duty against cheap imports of opal ware from UAE and China for five years will help the company to sustain and improve its margins.Now the company is also targeting corporate business including supply of products to star hotels..etc.which is untapped till now .Another important point to note is that the company’s efforts to reduce its debt level .In past four years La-opala reduced its debt level by 50 % which is very important and prudent decision by the management in a high interest rate regime. La-opala is expected to end FY 2012-13 with an EPS of Rs.15+ and FY 2013-14 with Rs.20+ , based on this current valuation is still at the lower end for a company operating in premium housewares segment with established brand and showing steady growth.There is no strictly comparable pairs but the demand trend of these products are almost similar to the products offered by companies like TTK Prestige ,Hawkins ..etc Citing all these positives management is aggressively purchasing shares( Sample Filing HERE) from open market in past few weeks even the price ruling around its life time high.Considering the favorable demographic changes ,increasing nuclear family centric life trends ,changing spending habits ,,etc companies like La-opala is expected to post robust growth going forward.Recommending this stock third time as a long term buy even at CMP of Rs.190 for investors with some risk appetite.Stock is listed both in NSE and BSE.
Link to Company website HERE
Disc : I have vested interest in La-opala.