Saturday, June 14, 2014

ASIAN GRANITO LTD - EMERGENCE OF A DARK HORSE ?



   

  

 
‘Own House ‘ is the dream and desire of everyone. Still ,millions are homeless in our country ,this along with shift from joint family concept to nuclear family concept creating never ending demand for construction  sector related themes.Commercial construction is another area creating demand for building products.Due to relatively higher interest rate and policy related matters  growth of housing and commercial construction sectors in past few years were muted . New government already announced its priority to provide house for all and assures positive initiatives in this direction.This does not means government will directly build house for every individual but create a situation which will reduce the burden to build a house like reduction in home loan rates..etc.Let us hope for some bold steps in this direction going forward. Along with this, many commercial construction projects are delayed due to environmental Clarence and other red tape related issues .Any sincere efforts to tackle this issues will revive the building material producer's business prospects. Stock price of many such companies like Cera Sanitary ware ,Kajaria Ceramics,HSIL,Astral Poly techniques,Somani Ceramics ..etc out performed the market in recent times.This week let us look into one such company which is trading at relatively cheap valuation – Asian Granito Ltd

Tile is the most preferred flooring material mainly due to convenience for  installation and maintenance ,cost competitiveness,durability and versatility .Currently ,India is the third largest producer of tiles in the world . Vitrified and porcelain tiles are relatively new addition and the entire tile industry is growing at 15 % per year even during this tough time.In our country more than half of tile production is still with un organised sector and organised players are handling the rest . Share price of largest listed peers ( Company’s with a turnover of more than Rs.1000 Cr /year) appreciated substantially in recent times and currently they are trading at an average P/E of  30 . Kajaria and Somani are the two companies in this category . In the growing mid size companies ( turnover between Rs.500-1000 Cr) segment Asian Granito is an unnoticed player which is trading at relatively cheap valuation.This stock is still trading at less than 10 P/E .It is a fact that market leaders always command premium over others but there is no justification for such a steep difference in valuation.
 

                                         Click on the image for a better view

As per a recent channel check  Asian Granito is the second most aggressive tile company next to Kajaria in marketing efforts in recent times. Company is now planning rapid expansion on a pan India basis .AGL increased  its manufacturing capacity 40-fold in 14 years, from 2500 square metres per day in the year 2000 to 1,00,000 + sq. mtrs per day .AGL recently opened its 52nd exclusive show room . It is planning  to set up 100 more exclusive show rooms  across India in next one year. In addition to this exclusive show rooms ,company selling its products through 4000 + dealers across the country .AGL exporting its products to over 40 couturiers and AGL is the first Indian company started exclusive show room out side India .Company started 7,000 square feet exclusive show room in Johannesburg, South Africa. AGL reported an increase of more than 50% in export in latest financial year which reached Rs .23 cr compared with Rs.14 Cr in previous yesr. In recent times AGL is very aggressive in product innovation front too.It introduced different variants of  Micro Crystal Tiles, Hi-Tech Tuff Guard, 3rd fire Décor tiles, Porcellanto digital tiles, Digital Glazed Vitrified ..etc. AGL management claiming its latest  ‘Carrara White’ double charge tiles  is the world’s whitest tile in the unglazed larger format category.All these efforts are started to yield results.AGL is the company which reported maximum growth in top line and bottom line even compared with large players from this sector in last quarter  .Company reported a Sales of Rs.252 Cr v/s Rs.207 Cr and a net profit of Rs.5.90 cr v/s Rs 3.63 Cr in March quarter . In FY 2013-14 full year company reported a top line of Rs.771 Cr ,net profit of Rs.14.3 Cr and an EPS of Rs.6.40 . It targeting a top line of Rs.1500 Cr in next four years.

Recently Company acquired 100 % stake in a group company named AGL industries which is in the export  of fresh culinary herbs , exotic vegetables and fruits. This is a high potential business and 3 management having enough bandwidth to develop it.After reaching a critical scale there is chances for value unlocking of this division but which is purely management's decision.( Link to the website of new division HERE )

I believe , from the current position of India’s 5th largest producer of tiles ,Asian Granito will advance few notch ahead in the times to come and become a dark horse from this sector .Company came out with an IPO in 2007 @ Rs.97 and its current book value is over Rs.120 .Stock is currently trading around Rs.49 .Recommending a STRONG BUY at current market price of  for long term investors.Stock traded in NSE under symbol 'ASIANTILES' and in BSE with scrip code 532888.

# Earlier recommended Orient Bell Ceramics from this same sector . Comparing the growth initiatives taking by both companies in recent past   now requesting to shift from Orient Bell to Asian Granito .

Link to Company website HERE

Link to Facebook page HERE


Disc: It is safe to assume that I have vested interest in AGL

59 comments :

  1. Thanks a lot for your recommendation..will try to buy on monday. Hope this stock does'nt get out of reach of normal people by hitting consecutive circuits like your most recommended scrips do.

    ReplyDelete
  2. Sir plz.give me ur valuable opinion on delta corp... shld hold or exit

    ReplyDelete
  3. Dear Sir,I really and heartfully appreciated your help, guidence and the right attitude that you are demonstrating. I have not yet started investing your recommendations but keeping in observations. Now, I will start. Thank you Sir.

    ReplyDelete
  4. Dear Sir,
    AGL Sales are going up from 2010 to 2014 Just double but profit are going down every year..Profit was 19 Crore agst.sales of 390 Crore in 2010 & last year sales 759 Crore but profit was 14 Crore means company is getting huge compition from there peers.Also there is no serious effort in cutting down debt.so Kindly inform why u r still recommanding this stock where profit of margin of comapny is just 2 % of sales means if there is more compition in next few year compnay can come in loss also ,
    Kindly reply me on above point.
    Regards
    Jitendra

    ReplyDelete
    Replies
    1. Profit margin of Tile companies depends mainly on two factors

      1) Product Mix ( High margin /low margin)
      2) Sourcing ( Own production/outsourcing from Indian producers / import from China)

      In both these points company now taking steps to match with the peers and that's why I believe it is the right time to enter in it.

      Delete
    2. Hello Sir,

      You say for best satisfaction you need to investigate yourself.
      I have tired doing that but could not make myself sure of which one to choose. Not experienced like you.
      I see you can select companies which is not good in financials like Jitendra has mentioned but still your selected stocks zoom.

      So, kindly share how do you know a company is going to be good player in future without supporting financials.
      Example: Sequent Scientific. I tired to understand why it is going up and why you and HDFCSec has recco it. But no clue from financials. Please help sir.

      -
      Regards,
      Satya

      Delete
    3. If you purely relay on the past financial performance of a company you can't make market beating returns . In one sense It is an art of predicting the future which will make money. You can develop such a way of thinking .But you should concentrate in points like :

      Keep your eyes and ears open and try to understand what changes are happening around the world and develop a knack to link the same with market and listed companies.

      Many people come to the market in a bull phase and disappear in a bear phase .At the time of bear market nobody is interested to follow a company or business. Lack of continuity in tracking companies and promoters irrespective of market mood or availability of funds will always affect our ability to asses the future of company .

      In case of sequent scientific , I am tracking the promoters of this company as the promoters of Strides Arcolab for more than 10 years and convinced about their ability to create wealth through various initiatives they taken in that company . Even if it not guarantee the similar situations chances are very high and they are showing the signs of implementing similar methods in this one too.

      Let us wait and see.

      So What I mean is common sense to arrive conclusions based on available clues is important than number crunching and using technical jargon ( Many people may differ on this but I believe so )

      Delete
    4. VP,
      Wow, It seems to be a matter of aptitude, which you seem to be full of !. For me even number analysis is difficult, forget the inference.

      Delete
    5. Thank you for you kind reply.

      For me also numbers are difficult but you cannot ignore it.
      VP sir is here from very long time so for him those numbers are just any snacks.

      " .. what changes are happening around the world ... "
      Yes, I agree. I got this training from Astral ploy story. Due to change is pipe and their advertising, they grown like anything.

      Yes, management and market are most important factors. To access that I need lots of exp like you.

      Thank you again for replying about Sequent S.

      While searching like I said, I got this company:
      "Digjam Ltd"
      Its QoQ data is very impressive. From March 14, to Mar 13.
      Any kind comment about it !


      -
      Regards,
      Satya

      Delete
  5. Sir

    Please guide me about alok industries .I have put a lot of money at 16 rupees.

    Please guide if Alok is good or bad.

    ReplyDelete
  6. Thank you!

    I was looking for such company but was not comfortable with higher valuation of HSIL,cera etc etc

    ReplyDelete
  7. Dear valuepick,i wud be happy if you wud tel ur views on d&h india if ur tracking it.
    Warm regards rashmi

    ReplyDelete
    Replies
    1. Not a bad company but need patience till the economy revive.

      Delete
  8. Hi,

    Are you tracking TCI? Do we hold it or book profit?

    ReplyDelete
  9. Dear Valuepick ji,

    What is your opinion about Arshiya international ltd. Is it wort buying at CMP due to its debts? kindly advice.
    Regards
    Sajeev

    ReplyDelete
    Replies
    1. Take some exposure if ready to take maximum risk

      Delete
  10. I am holding Selan Exploration bought at Rs. 300/- Still worth holding or to book profit

    ReplyDelete
    Replies
    1. Good stock but don't forget there will be corrections in any up move in case of all stocks.

      Delete
  11. Sir, do you know sir " United Drilling Tools" is consistently trading in UC since you recommended on 31st May. Recommeded @30 and now cmp @ 51...some picks are really out of reach and we cant do anything....but still appreciate your efforts and research for bringing such gems to our life...
    God bless you!!

    ReplyDelete
  12. Sir what is your views on Pacific Industries having EPS 55.43 and PE 2.74 from the same sector i.e. manufacturing of Tiles

    ReplyDelete
    Replies
    1. No idea about its promoter quality

      Delete
  13. Sir please your view upon prisem cement and mangalam cement

    ReplyDelete
  14. Sir, are you tracking jklakshmi cement. If yes kindly enlighten me with your valuable suggestion

    ReplyDelete
    Replies
    1. Yatharth parasrampuriaJune 16, 2014 at 11:56 PM

      Sir, thanx for your advice
      I bought 500 shares @ 175. I am planing to buy 1500 around 210 level. But the script is showing great support at 221 level. Sir should i re work my entering level or wait for a market correction as i am willing to make a long term investment. I would be greatful to you sir, if you let me know about the future of the script.
      Sir, thanx for your cooperation. Young investor like me, are greatful to you for guiding us and leading us to the right path.
      Regards
      Yatharth

      Delete
  15. Dear Sire,

    I've a general question. What is meant by 'Extinguish of Shares'? I know buyback and I thought after buy back, number of shares held by promoters will increase. In the given attachment in page 1, how is that number of shares in column 2 and 6 are same but the % increase? What happened the shares those were bought back?

    http://www.bseindia.com/xml-data/corpfiling/AttachLive/Gujarat_Apollo_Industries_Ltd_160614_SAST1.pdf

    Pls advice.

    Regards,
    YK.

    ReplyDelete
    Replies
    1. In simple meaning ,the bought back shares cancelled and company's equity reduced by that extent.

      Delete
  16. Sir,
    Your view on GMM pflaudler if you are tracking it.

    ReplyDelete
  17. Sir,
    Your opinion about GMM Pfaudler if you are tracking it.

    ReplyDelete
    Replies
    1. Hi VP Sir,

      What is ur view on Lloyd electric.? valuations look very cheap
      Thanks in advance

      Delete
  18. Are we able to deal with bulk like 5,000 or 10,000 quantity or above it?Some persons are saying,‘‘we should not buy 5,000 or 10,000 or above it.Because buying company will notice that particular client..That stock shan‘t cross our buying price long day‘‘.I donot know is it correct or wrong.kindly solve my query.Thank you sir

    ReplyDelete
    Replies
    1. Bulk deal means total quantity of shares brought/sold is more than 0.5% of the total number of equity shares of the company listed on the stock exchange

      Delete
  19. Hi,

    How do you compare it with NITCO? Isn't NITCO more undervalued? If demand of flooring and tiles increase, I believe it will benefit both the companies. So, which one is better bet?

    ReplyDelete
    Replies
    1. The risk / return /waiting period equation of a potential turn around stock is entirely different

      Delete
  20. Sir, can you share your view on Somany and HSIL

    ReplyDelete
  21. Dear VP Sir, How do you see XL TELECOM for long term?
    Stock crashed from higher level to only 1.9 and now 6.04.Is it turn around story for the company as GOVT. taking decisions in favour of energy cos.?

    ReplyDelete
    Replies
    1. In a market like this every second company may move .But we should keep some minimum standards in selecting stocks ,otherwise we will trapped at some point of time .I am not saying this or other stock like this will not move but I am not interested to recommend these type stocks to my readers.

      Delete
  22. Dear VP sir,

    First of all thank u for ur hard work in picking the right stock at the right time and also help us to understand the valuation of the company. I was trapped in many stocks as i bought it wid the blind eyes but now coming in contact with this site i know understand how to pick the share at fair price..i like ur way of remebering Warren Buffet statements...Sir now i am very confused about one share in these days Texmo Pipes and Products. Sir plz there is a request to you if u dont track this share then plz just look it once time for me as it is attracting me at this valutation and i want ur support for this if u like it or not...

    thanx

    ReplyDelete
    Replies
    1. It is difficult for me to recommend any stock without tracking it - especially its promoters - for a long time .

      Delete
  23. Dear VP ji,
    After ur recommendation on ASIANTILES i like to buy.But its in Uppercircuit and i unable to buy due to no sellers of that stocks.How can i buy that stock?If i login at exact 9.30 can i buy ?
    And also give me ur view on saksoft limited and SJVN limited.
    Give me a tip how to find the target of any stocks?
    many thanks

    ReplyDelete
    Replies
    1. Dear Balu,
      Google it for getting many tips on how to find the target of any stocks, u'll get many.
      don't ask for spoon feeding from a blog meant for investor fraternity.

      Delete
  24. Sir bilcare should keep or exit...
    Pls let us know your view

    ReplyDelete
    Replies
    1. Bilcare recommended on 7-6-14 with following comments...
      "I believe , from the current position of India’s 5th largest producer of tiles ,Asian Granito will advance few notch ahead in the times to come and become a dark horse from this sector .Company came out with an IPO in 2007 @ Rs.97 and its current book value is over Rs.120 .Stock is currently trading around Rs.49 .Recommending a STRONG BUY at current market price of for long term investors."
      just 10 days have past & getting such questions are pathetic...
      this blog is for investors, not for traders...!!!
      plzzzz...avoid wasting time of all viewers...& pay some respect to the gentleman who is dedicating his time in such knowledge sharing..

      Delete
  25. dear vp.
    i need ur reco for wockhardt.

    ReplyDelete
  26. Login At 09:00 and Place limit order to the upper circuit amount.. if you are lucky enough it will be executed before 09.08 hrs. If not keep the order on the day. santosh R

    ReplyDelete
  27. Sir can I place order for this scrip at 9.00 am in pre market? Or after 9.15?

    ReplyDelete
  28. Sir, very good pick I was eyeing this stock from few days. I have conviction in this stock & i think that this stock has a potential to reach levels of 150+ if hold for a year. Moreover ace investor mr. bharat patel is a major public shareholder in this company.Dear v.p sir What do you think about gujarat borosil at this price.

    ReplyDelete
  29. Still no chance to get AGL after continuous UC full week. While most of shares you shows as double 'but even after six month at our price either in loss or around 10% Profit. How you suggest to grab this opportunity, please.

    ReplyDelete
  30. I tried at 9:15 and I got shares

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  31. I bought @ 72,now 87.45 in UC.Thank You.

    ReplyDelete
  32. Asian Granito India Ltd introduces the 8-colour printing technology on tiles in India

    More details here - http://www.equitybulls.com/admin/news2006/news_det.asp?id=147296

    ReplyDelete
  33. I am waiting for Asian Granito Result update. Is it given somewhere where my eye is not reaching. Because I see many result update.

    ReplyDelete
  34. Hi Sir,
    I bought Asian Granito based on your suggestion @ 63. Thank you! The stock is now 250+, should I exit?
    Thanks

    ReplyDelete

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