Saturday, December 1, 2012

LA-OPALA RG -------- REPEAT






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.


64 comments :

  1. Replies
    1. Mentioned many times in the past about this one.

      Delete
  2. Hi VP,
    Dont you think this segment has low entry barrier as against Cookers(hawkins and ttk prestige).

    Do you think la opala can still sustain long term growth given highly fragmented segement it operates.

    Regards
    Amit

    ReplyDelete
    Replies
    1. Even in the case of Cookers I don't think the technology is very complex and there is any big entry barrier.Many regional players are also fighting in this segment .In such a business Brand Value,Quality,Image of product and good nation wide marketing channels play as the key .Even comparing cookers I feel there is better scope for organised players in this segment mainly on account of introducing latest designs,commodity used for manufacturing ..etc.Laopala is now present in glassware and opalware.More than that ,I think ,comparing with cookers frequency of purchase is higher in the case of these type housewares.Cookers are used in Kitchens and normally an outsider is not seeing it but plates and other these type items are visible for guests and outsiders so people have a tendency to change it according to changing fashions and designs.

      Delete
    2. liked the last sentance.was very true

      Delete
  3. Hi VP,

    What do you think about Thomas Cook (after this management change)?

    ReplyDelete
  4. Value ji,
    How much exactly is long term??

    6 months, 1year, 5 years ?

    Shekhar

    ReplyDelete
    Replies
    1. For the purpose of tax treatment it one year for shares.But for majority of our investors it is one week or maximum one month.:) .For me even one year is not long term.

      Delete
    2. VP Ji,
      In your recommendations, When you say that invest for "long term", what is the definition of that period? 1 years, 2 Years, 3 years or more....

      Regards,
      Manmohan Garg

      Delete
    3. Dear Manmohan

      Why we need to change stocks frequently rather than keeping one till its growth saturated or the market price over shoots beyond a level which can't be justified based on the visible growth certain years ahead ?

      Delete
    4. Got the point..thanks..

      Manmohan.

      Delete
  5. Sir,
    I know you don't like any share from RPG group,yet what are your views on KEC international?

    ReplyDelete
    Replies
    1. Not enough confidence to recommend any stocks from business groups like RPG ,Essar..etc

      Delete
  6. Hi,

    Great stockpicking and analysis.

    Saw a management interview dated Jan 2012 wherein the MD was confident of a 50% increase in volumes this FY. As per him the new capacity was to kickin by April thus contributing to 50% volume growth. But the nos this year havent been that good. Was the capacity not on stream by Apr? Was there demand slack?

    Cheers

    Vinod

    ReplyDelete
    Replies
    1. Dear Vinod

      Completion of expansion delayed a bit but now it is operational.Check the below link for a latest interview ( just two weeks old) of MD

      https://www.youtube.com/watch?v=9balybqU6O4

      Delete
  7. Do you track cox & kings, what's your view for long term? Also i am stuck in glodyne technosoft, is there any chance the shares would be back to levels of even 80?

    ReplyDelete
    Replies
    1. Not tracking Cox and King.Better to avoid mid size IT companies where promoter pledge is very high.

      Delete
    2. Thanks sir. What's your view about Hitech plast?

      Delete
  8. Sir, what is your opinion on Rama Phosphate?

    ReplyDelete
  9. Dear Valuepickji
    Sir what is your view on JBF Industries.
    Regards
    Suvankar

    ReplyDelete
  10. Sir,
    Any view on Harita Seatings.. can one hold for better times as not sure Auto sector will do well.

    Any view sir.

    ReplyDelete
    Replies
    1. Re rating is possible in auto and related sectors after a rate cut.

      Delete
  11. Respected sir,
    Can we get into Arman Financial Services at current level? Concerned about decrease in Promoters stake in last quarter..
    Do you recommend any another stock in Micro finance sector ?

    ReplyDelete
    Replies
    1. Now not tracking this sector due to lack of clarity in laws.

      Delete
  12. Hi,

    la-Opala is no doubt a good brand and have distinct following. Most vibrant sales are in dinner sets etc which are gain large ticket purchase compared to single crockery items where mostly smaller unbranded players sell more due to price point.

    Wanted to know what is the potential market size (2012-2015) and La-Opala's market share going forward ?

    Thanks,
    Rudra

    ReplyDelete
    Replies
    1. In the premium Opalware segment La-opala 's market share is close to 25-30 % .I believe many people including someone commented here more concerned about competition from unorganized sector has mistaken in one sense .They are not distinguishing opal ware and porcelain and thinking both these are same.Actually it is two different items and unorganised players are mainly in porcelain and Melamine products.La-opala's major competitors are Luminarc from France and Corelle from the US.

      Delete
  13. Hello Sir,
    Whats your view on Elecon Engg from Gear or Cap Goods sector? I am invested since years but the stock doesn't move due to whole engg sector being down.
    With expectations on interest cut, do you see point in holding or can I book out after holding almost 4 years.

    I am also looking at Harita Seats which you had recommended and seems available at reasonalble levels but the profit margins are down. Do you see value in this stock too at current levels?

    Thanks,
    Raman

    ReplyDelete
  14. dear value pick sir,regardds
    holding epc ,granules,simran,ionex.made good profit in granules..thanks for your picks...
    \need to know about sugar sector right now....and ajanta pharma holding from 294 pre split....the profit this quarter was good as well...should i keep holding ?thanks

    ReplyDelete
  15. Wait for some more time before exiting from companies belongs to Engineering,Real Estate,Auto..etc

    ReplyDelete
  16. Whats your view on management salary

    ReplyDelete
    Replies
    1. Dear Sunil

      I don't think taking decent salary is a sin in corporate world.In 90 out of 100 cases where promoters are taking low salary ,they are looting money from the company through other accounting adjustments.If company is growing and promoters are willing to share the profit with minority share holders too ,I don't think anything wrong in it.

      Delete
  17. Dear Sir,

    Great stock picking and Valuable information.

    What is your view on Suprajit engineering ltd and Himadri chemicals.

    ReplyDelete
    Replies
    1. Not tracking Suprajit.Let some clarity emerge about the expansion plan of Himadri Chem especially fund raising for it.

      Delete
  18. Hello sir, First of all thanks for your contribution towards small investors like me... A company (Midvalley entertainment) is not traded for the fast few months.. Whether there is chance for this company to enter market again and trade.. I have invested in this company.. Please advice.
    Thanks Prabu

    ReplyDelete
    Replies
    1. This stock suspended due to penal reason.I can't say anything about ..

      Delete
  19. Sir, any take on L&T finance holdings? Even if it does not get banking license or maybe does in 1-2 yrs. whats your take on current status?

    Many thanks,

    Rajesh

    ReplyDelete
    Replies
    1. For low risk long term investors - HOld

      Delete
  20. Dear Sir,

    Is this the right time to invest on Glodyne Technoserve Ltd Share. Please share your views.

    Thanks & Regards,
    Rajeev

    ReplyDelete
  21. SIR,
    I AM HOLDING HERITAGE FODD at around rs 400.should i book profit.though i thought to hold it for long term bit confused now

    swati

    ReplyDelete
    Replies
    1. Your confusion is an indication of lack of conviction.I never advice anyone to hold a stock if have no conviction.This problem arises( confusion when price is volatile) mainly due to people invest in stock market not in stock or company.I have no confusion and it is a HOLD and buy on any dip FOR ME.

      Delete
  22. sir

    whats your current view on sundaram brake linings??

    its an extract from their last years annual report

    "EXTRA-ORDINARY EXPENDITURE
    As reported in earlier publications and Annual Accounts, the Company had entered into the arrangements for
    settlement of disputes arising out of certain derivative transactions entered into on behalf of the Company with
    some banks. The settlements were subject to fulfilment of payment obligations arising on the Company for
    specified years which have now been fully met by the Company. With the discharge of all obligations in accordance
    with the settlement agreement, there is no further liability on this account. As per the practice followed in the
    past, the final amounts amounting to Rs.14 crores has been included in Extra-ordinary Expenditure .
    With Your valuable support, Your Company has fully come out of the extraordinary crisis that had arisen in
    2006-07 on account of Unauthorized derivative transactions and can now look forward to better times ahead"

    In your earlier report you mentioned the extraordinary expenses will be over only by march 2013.looking forward for your views..pointing out some concerns too

    1)The company has delivered a poor growth of 6.23% over past five years.
    2)Company has a low return on equity of 6.76% for last 3 years

    thanks in advance

    ReplyDelete
    Replies
    1. Expecting improved performance going forward.

      Delete
  23. Sir,

    I see this Stock Jumping 8% after you posted the recommendation. I have see similar trend in some other stock too. Nice to know that there are lot of people go by your Advice and pick up stocks.. Keep the Good work and really appreciate your updates on fundementally sound company.

    ReplyDelete
  24. sir,
    what are your openion about datamatics global.promoted by one of the founder member of tcs.apart from that low debt and high promoter holding.

    sachin

    ReplyDelete
  25. Hi Sir,

    Can i know your opinion on TVS Motor and its partnership with BMW if finalised?Can i buy this stock

    Thanks in advance,
    Jacob

    ReplyDelete
  26. Dear sir, there is heard on teh street that "Atul Auto" would be entering into 4-wheeles segment. Is that true, if so how do you see future growth and would like to give any suggestion at cmp?

    ReplyDelete
  27. Sirji

    Your view on Force motors and voltamp
    Thanks for your effort and time

    BRK

    ReplyDelete
  28. Sir what about minda and pricol, Do you track these?

    ReplyDelete
  29. Dear sir,

    Accelya kale cosultant stock hits continous uc's last week, & lc's this week, sir kindly request your view on any change has occured?

    ReplyDelete
  30. Sir,
    what 's your views on NBCC at current market price ?

    SK

    ReplyDelete
  31. sir may I know ur views on hcc? I bought it at Rs.40/share at the time of IPO announcement of lavasa.

    thanks
    senthil

    ReplyDelete

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