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Saturday, May 08, 2010

Superhouse: Value Buy??



Superhouse
CMP: 50.35
Market Cap: 55.51Cr
Free Float: 27Cr
Debt: 88.70Cr
Sales Year 2009: 344.45Cr
Operating Profit: 30.05Cr
Taxes: 5.68Cr
Net Profit: 7.57Cr
ROCE: 12.73%
Debt Equity: 0.92
Long Term Debt Equity: 0.36
Divident: Rs 1.20
Divident Yield: 2.38%

Company Website: http://www.superhousegroup.com/
Superhouse is an established firm dealing in production of finished leather, leather products and textile garments. It is also established as the largest manufacturer of riding products such as breeches and riding shoes. It has 15 manufacturing units located in agra, kanpur, noida and unnao. It is an approved vendor for global brands such as Walmart, filanto, Carrefour , Metro MGB Group, Auchan, Andre, Shoe Fayre, Hudson Bay, Heckel Securite, Secura.

It also has its own brand of shoes Allen Cooper (Mens Shoes) and Double Duty (Safety Shoes)



Company results in recent quarters has been improving.. the stock also seems to be trending up.
The promoters have been increasing their shareholding in the company:
March 2006: 37.03% March 2007: 41.83%,  March 2008: 44.84%,  March 2009: 49.55%, March 2010: 54.50% Most of the increase in shareholding has happened through preferential allotment and amalgamation of private companies in the same line of business.


Conclusion: Company looks all set to deliver better results in the future. It is also entering into the indian retail segment. Margin expansion can be seen for 12 trailing months as compared to last year. Presence of privately held companies in the same line of business exist which could result in diversion of profits but a lot of private companies have been amalgamated which shows the intent of the promoters to concentrate business in Superhouse limited. An initial investment can be considered keeping the attractive valuation in mind. Also the stock is not yet discovered so we will get a finder's fees.. This is a long term play and any investment should be considered keeping at a minimum 1-2 year horizon or more.

8 comments:

Anonymous said...

Hi Whatsup,

Which would you suggest me to enter for good returns with 1-2 yrs horizon.... SKM EGG or Superhouse?

thanks

What'sUp Prahalad said...

Anonymous:

I think both have a place in one's portfolio.. Superhouse has been languishing for quite some time.. but the management seems to be changing for the good and the stock has lot of value..

SKM is one of the few listed Egg Powder manufacturers.. Venky's also has this business but its not part of listed Venky's but one of the many private companies owned by the promoters in the same line of business..

Egg powder business has good margins and is a basic requirement (food) demand will exist forever..as consumption is on a daily basis..

I would say 60-40 Superhouse-SKM..
as SKM becomes profitable.. you can turn the ratio around till then we can enjoy the growth and dividents from Superhouse..

=happy investing
whatsup-indianstockideas.blogspot[dot]com

Anonymous said...

Thanks Whatsup for ur feedback.

My one concern is that Superhouse is already close to its 52 week high. Wanted to know what you feel could be a 1 yr target for Superhouse? Thanks

What'sUp Prahalad said...

Anonymous:

If I could give a target for Superhouse I would ..
as Mr. Damani would say..
"I am not in fortune telling business"

Superhouse is a value buy and that is all I can say.. when the value will unlock is a guess.. generally 1-2 yrs is a good time to wait after which we need to review our investment decision..

If you are not so certain about Superhouse remove your capital invested and keep the profits..

Superhouse is a divident paying company and pretty well established in its line of business.. your investments should hold value..

=happy investing
whatsup-indianstockideas.blogspot.com

Anonymous said...

thanks a ton whatsup.....

SKM EGG has shot up today? Any particular reason you see for its sudden spike up? I had not picked up much qty in it as u had informed that it will take more then 1-2 yrs to perform?

Do let me know ur suggestion. thanks!

What'sUp Prahalad said...

Anonymous:

SKM was over sold to maintain the 50% equity exposure for individual in demat form.. as per SEBI guidelines..

Pls look at the following article in the blog:
http://whatsup-indianstockideas.blogspot.com/2010/10/sebi-guideline-50-of-public-holding-in.html

SKM promoters sold into the market to keep the 50% public shareholding in SKM in demat form hence the stock was depressed..

So move to 17-18 is just a jump to normal valuations.. (skm was suggested at around 18 so this is just a move to fair value for SKM)

Also I dont know why the share transfer manager for GAEL left? is it because I exposed the promoter buying from market .. which is consistent with number of shares converted into demat by public.. exposing the promoter's use of information for their own personal gain?..

=happy investing
whatsup-indianstockideas.blogspot.com

Anonymous said...

Dear Sir, 2010 you wrote about this company (SuperHouse). After two year price running almost same level. LAst two three year observation have you increased your conviction level? How you rate company now? Same sector stock Relaxo footwear moved from 200 to 700 level during these period.Bata also doing well...I would appreicate your current take on this company

What'sUp Prahalad said...

Anonymous ji:

Superhouse is a great company .. unfortunately very little visibility..in the market..

I would continue buying it on dips..

dont worry your money is much safer in superhouse than with bata..

If given a choice I would buy Superhouse over bata any day!!

=happy investing
whatsup-indianstockideas.blogspot.com