Saturday, December 28, 2013

SUPERHOUSE LTD - REPEAT


  

How long investor fraternity can ignore a company which is showing continuous growth in past ten years with uninterrupted dividend paying history and led by decent management ? .Answers may vary ,but one thing is sure – if history is any indication , once investors will find it out which will result in sharp re-rating of stock price.The company in question is Superhouse Ltd which I recommended earlier @ Rs.62 few years back and even after  reporting  robust performance in business thereafter, it is still trading at cheap valuation.



                                                                   Rs.600 crore Superhouse is the second largest exporter of Leather footwear and other leather products from India .Its products are exporting to countries like France, UK, Germany, USA, Canada, Spain, Scandinavia, Netherlands ..etc  under its own brand “ Allen Cooper” and supplying to various companies like Topman,Barrats,Next,Ikon,Bata, Hush Puppies ,Pierre Cardin,C&A,Eram,Andre, Dorothy Perkins, Nilson Group, Acebo’s..etc.In the safety shoe segment company exporting products under own  brand “Double Duty” to Gulf countries and European countries.More than 80% of company’s turnover is presently from export and only now company seriously  exploring the opportunities in domestic market with their “Allen Cooper “ brand.  (Product offering in India can access HERE)  Superhouse group having 15 manufacturing facilities in India and marketing offices in UK, U.S.A., U.A.E. Canada,and Romania..etc .With the vast experience of promoters in this field ,Superhouse  showing excellent growth in past many years.

                                                                       On Valuation basis Superhouse is one of the cheapest quality stock available .Company reported a top line of Rs.592 cr and a net profit of Rs.23 Cr in last financial year. Company reported sharp improvement in its performance in the first half of current FY where it reported a sales of Rs.325 Cr and a  net profit of Rs.15.5 Cr .Company reported an EPS of Rs.14 in the first half itself v/s Rs.9 reported same period in last year. Export oriented sectors are expected to perform well in coming years due to improvements of economies of Western countries. Since, company earning lion share of its income from overseas market ,any improvement in US and EU countries  will help Superhouse to perform exceedingly well going forward .I expect superhouse can report an EPS close to Rs.30 in this full year.At current market price of Rs.100 ,it is trading even way below  its consolidated book value of Rs.162 !!.Even if  investors ignored this stock so far ,promoters are confident about their company and hiked their own stake in the company sharply  ( from 45% to 55%) during last 5 years.I believe ,this is the perfect time to look into this stock due to a special reason too. As per the relaxed Periodic Call Auction guidelines Superhouse is eligible to come out of PCA .This is expected to happen within next 10 trading sessions.

                                                                   Considering promoters experience,continuous growth in business,very cheap valuation,brightening export opportunities – recommending Superhouse again at CMP of Rs.100 .After the announcement of relaxation in PCA, like many other such stocks, Superhouse also recovered in past few days .But considering its  one year forward P/E  of less than   4 even at CMP ,I believe there is very good chance of further upside even from current level.

Stock listed only in BSE with trade code 523283

# Since this stock is currently trading in PCA ,order entry is permitted only from 9.30 AM.

Link to old posting HERE

Link to Company website HERE

Link to latest Annual Report HERE 

Disc: I have vested interest in Superhouse.

66 comments :

  1. Sir, Sarup Industries from the same industry is another stock, what do you think about it?

    ReplyDelete
  2. The reason for low discounting maybe the low dividend payout ratio ?

    ReplyDelete
    Replies
    1. Yes,that is the only negative we can say about this.But even if in a slower pace they are increasing it over the past few yesrs.

      Delete
  3. Hello Sir, Superhouse made 2 overseas acquisitions in the last 2-years, what do you think about these acquisitions?

    ReplyDelete
    Replies
    1. Yes the latest one is Spanish company Linea De Seguridad ,

      http://www.securityline.es/empresa.php

      Delete
  4. Sir, what are your views on Mirza International from the same industry?

    ReplyDelete
  5. Sir, would you prefer Mirza Tanner or Superhouse? and why?

    ReplyDelete
  6. Sir
    you bullish on Mirza Int which is in same field?

    Ashish

    ReplyDelete
  7. Mirza is not a bad company,but in case of stock price appreciation ,even if fundamentals is the prime reason ,it is not the single reason driving stock prices.So I prefer to stick with Superhouse .

    I may be proven as wrong too :)

    ReplyDelete
    Replies
    1. Now one such reason has come ,you can go for it @ CMP Rs.32

      Delete
  8. Sir,

    Their website talks about having lot of other businesses like real estate, retail, textile, pet foods etc. But these are not considered in their financial statements. Are these dormant?

    Thanks,
    Sunil

    ReplyDelete
    Replies
    1. Sunil

      The given website is their group website where all business of promoters are listed

      Refer company's own website ,link below

      http://www.superhouse.in/

      Delete
  9. I have seen in 2010 ur scripts uped 4 times. Times again came after 3 yrs for same. Ur hard work is rewarded to real investors.

    ReplyDelete
  10. In some articles, I read investor try to avoid multi business companies like Super house as they do real estate, pet food etc...Is it correct? or multi business is good? Can you please share your view?

    ReplyDelete
    Replies
    1. I don't know why this confusion.The listed company having only one business - leather and allied products.

      Delete
  11. Sir what about rjbiotech...? Its nt trading properly...

    ReplyDelete
    Replies
    1. What do you mean by properly ? .Stock is trading in SME exchange as per law of that platform

      Delete
  12. Sir
    PLease share ur vies on JM financial at CMp?

    ReplyDelete
  13. Dear valuepick ji, can you list some fundamentally good stocks under PCA now and which has the potential to come out of PCA in the future for longterm holding? Thanks in advance.
    Senthil.

    ReplyDelete
    Replies
    1. Many such stocks discussed in recent times ,like:

      Sunshield Chemicals
      Paushak
      Superhouse
      Acrysil..etc


      Delete
  14. Hi Sir,
    SupoerHouse is good when compare to to its peers ( Growth, ROCE etc..) but it looks illiquid stock. Can I purchase assuming that it will become liquid once its come out of PCA ? You advice is highly appreciated.

    Thanks
    Venkata

    ReplyDelete
    Replies
    1. Liquidity of any stock will increase when more and more investors identify its potential.

      Delete
  15. Hi VP Ji,

    God bless you always for your kind suggestions.

    I have one question regarding contingent liabilities of the company.

    As the amount is quite high against the annual net profits of the company and not shown on the balance sheet.Would like to take your view on this.

    Hope for your detailed reply

    Regards,
    Cautious Investor

    ReplyDelete
    Replies
    1. Even if it is provided as Contingent liability ,chances for real occurrence may be low .That may be the reason for exclusion.

      Delete
  16. Sir , Is Jain Irrigation a buy at current levels ?

    ReplyDelete
    Replies
    1. Go for it only if you have enough patience.

      Delete
  17. Sir, do you track Dishman and any view on it at current levels?

    ReplyDelete
  18. Dear Sir,

    Thanks for giving us all the excellent recommendations.I bought liberty @140.I have read the recent interview with the CEO and they are very confident of achieving good profit n grwth in the future.I have two questions:
    1.Despite the confidence shown by promoters,why r they selling the stocks in open market.They have sold their shares 2 times this week.
    2.Also if they acheive the top line,bottom line and grwth which they are expecting,can we assume that it can be a multibagger like Loapola.


    ReplyDelete
    Replies
    1. The selling party having less than 1 % stake in company and the quantity sold is not very big .This may be due to some personal requirement too.

      Company's owned good brands will always command premium valuation in stock market.

      Delete
  19. Dear Sir,

    Can you please give view on HSIL, IDFC and Manglam Cement. These stocks also didnt get appreciated despite sensex is 21K. How is the fundamental of these company currently. I am long term inverstor.

    ReplyDelete
    Replies
    1. All stocks are good,patience is the key.

      Delete
  20. Hi

    Whats your take on Rossel India?

    ReplyDelete
    Replies
    1. An already recommended stock,no change in previous view

      http://value-picks.blogspot.in/2012/01/rossell-india-ltd-buy.html

      Delete
  21. Sir,
    Please provide your views on Wanbury. Even though major part of their sales is through exports, they are not yet showing profits (even with higher dollar value). But they have good number of branded medicines, any chances of turn around?

    Thanks,
    Sunil

    ReplyDelete
  22. your view on AIA ENGINEERING
    Thank u

    ReplyDelete
    Replies
    1. Possibility of a one time hit ,buy on decline.

      Delete
  23. Hi Sir I want to invest in stocks . I am a young trader .Can u please advice which stocks to buy for long term ?

    ReplyDelete
    Replies
    1. This blog is not intended for TRADERS.

      Delete
  24. Dear sir . Are you tracking Exide Industries ? What your view at CMP ?

    ReplyDelete
    Replies
    1. I prefer Amara Raja from same sector.

      Delete
  25. Hi VP sir, "LIBERTY" has already have gone up from your recommended price prior to arrival of New year 2014. sir, is it still a Hold for further gains.....?

    ReplyDelete
  26. Dear vpji,

    Could you please give your valuable opinion on holding Sundram Fastners.

    Thanks and Kind Regards,

    Roshan

    ReplyDelete
  27. Sir

    Your view on Globus Spirit....Should I buy at CMP.

    ReplyDelete
  28. dear vp, There was a block deal in Sequent. How can we get details of that block details. can you give me some clue. regards Regards Rama

    ReplyDelete
  29. Dear VP ji,
    please suggest if Techpro Systems @ CMP can be a buy?

    ReplyDelete
    Replies
    1. Company having serious debt problems ,risky

      Delete
  30. Sir, Ion Exchange has been posting better results, still why it has not been performing?

    ReplyDelete
    Replies
    1. Sector is out of favor now ,that may be the main reason

      Delete
  31. dear VP,
    Wish u n your family a Happy New Year...

    regards

    vimal

    ReplyDelete
  32. Sir,

    Can you please throw some light on Firstsource Solutions.

    Arun Kumar
    Hyderabad.

    ReplyDelete
    Replies
    1. Eager to know your views on Firstsource Solutions.

      Delete
    2. Not tracking this stock ,so not in a position to comment on.

      Delete
  33. Sir,
    Any update on Zicom after your recommendation. Is it a buy at CMP?

    Thanks,
    Sunil

    ReplyDelete
  34. Wishing you and family a great new year with all the good things in life!!! Sulekha Sathyan

    ReplyDelete
  35. Sir,
    very happy new year 2014.
    If there is a choice b/w nitco and superhouse, which is your preference? Cause I want to invest in only one share andcurrently both are trading above the CMP recommended by you.

    ReplyDelete
  36. ValuePick ji....First of all Thanks a lot for putting all ur effort for us....I am very new to this blog...so really late :) is Superhouse still a BUY at CMP 210? and is it better than Liberty at CMP....Thx in advance...Happy New Year 2015 to u and ur family....God Bless U!!!

    ReplyDelete

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