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Friday, June 16, 2017

Manugraph India: Revisited

Manugraph India was recommended in Sept 9,2010 @ 50.10 Market Cap: 152.84Cr
Today Sept 15,2017 Manugraph CMP is: 50.05 Mcap 152.15Cr.

Manugraph is still struggling to report profits and recently reported that its American subsidiary "Manugraph Americas" has filed for bankruptcy protection. There is also report of Workers going on Strike..
Is there something we are missing out here??..

All those who have followed manugraph India know that its the market leader in India with about 70% market share as well as it has developed new presses with double width and speeds upto 70,000 cph(copies per hour) after purchasing DGM, Manugraph has incorporated new technologies and started manufacturing high speed presses of 60,000 to 70,000cph. Manugraph also has the distiction of always paying dividends to shareholders even when it was reporting losses..

So maybe stock price wise... the stock looks like its going nowhere, Manugraph the company is live and kicking.. what caught my eye (and the reason for suggesting a buy is the shareholding pattern for Manugraph.)

March 2016 Largest Public shareholder is : Reliance Mid-Cap Small Cap Fund: 17,09,978 shares.
Total public shareholders in March 2016: 12,369 shareholders

One year later: March 2017: Largest Public shareholder (Reliance Mid-Cap Small-Cap fund) is no longer a  shareholder in manugraph but the Total Public shareholders in March 2017: 12,243 shareholders

So even as the largest shareholder has sold manugraph shares (17 lakh shares)... Number of public shareholders has decreased by 12369-12243 = 126 shareholders.
Ideally when large shareholders dump shares in the market.. the shares should be distributed across number of small shareholders increasing the no of shareholders for manugraph..... but Surprise Surprise

So not only has the 17,09,978 shares been accumulated by strong hands.. It seems the strong hands have accumulated shares from the open market from other small shareholders

HNI(High Networth Investors) holding more than 2 lakh face value shares(1 lakh shares as manugraph is Rs 2 face value shares):
March 2016: No of shareholders: 6, No of shares:11,57,701 shares,  Percentage: 3.81%
March 2017: No of shareholders: 9, No of shares: 19,85,969 shares, Percentage:6.53%
3 people have added: 19,85,969 - 11,57,701 = 8,28,268 shares (@ 50 worth 4.14Cr)

No of small shareholders (holding less than 2 lakh face value shares):
March 2016: No of Shareholders:11,574, No of shares:69,09,845 shares, Percentage: 22.72%
March 2017: No of shareholders: 11,411, No of shares:70,32,023 shares, Percentage: 23.12%

Even in small shareholder category..as the no of shares has increased by 1,22,178 shares, number of shareholders has reduced by 163 shareholders (11,574-11,411=163) there is consolidation at  all levels..

So from what I see Big money is accumulating Manugraph shares..

If you look at the charts.. manugraph has just turned bullish after 8 long years..
200Day EMA (Exponential Moving Average) has moved Above 999 Day EMA (kind of Extra Long Golden Cross)  [Golden Cross is when 50Day EMA moves above 200Day EMA]

Conclusion: On the face of it Manugraph seems to be still in doldrums.. with losses being reported and with Manugraph Americas filing for bankruptcy.. and Workers going on a strike..

But looking at the shareholder data.. there are some big investors who have accumulated Manugraph shares and technically also the share seems to be growing stronger every day..

We as investors have to decide what does our conviction say? I would personally say Buy!!

PN: This is not a recommendation service.. I maintain this blog to review my own thought process and investment logic... Please do your own deep dive before investing


Karthikraja K said...

Do u hv it

What'sUp Prahalad said...

Karthikraja ji,

I do have manugraph in my portfolio

=happy investing

Karthikraja K said...

Dear Sir,
What is the moat? thank you for enlightening.

What'sUp Prahalad said...

Karthikraja ji,
1. The moat is their After sales service and quality/Value equation..
Manugraph is not the cheapest but its the best "Value for Money"
and best after sales service.. cause as a printing press.. every day you need to have the system running and prints out on time..

2. The management is always looking for latest technology addition.. latest is they want to include barcoding or variable data in static print copies.. ie add inkjet technology with their web offset printing https://goo.gl/VQWVP7

3. Their competency is adopting technology and now they are into CIFlexo printing

I think its a hidden gem.. market leader with 70% market share.. and keeping itself in the picture with regular technology upgrades.. now entering in CIFlexo

=happy investing

Deepak said...

I am also very bullish on Manugraph. Just read your article and it looks interesting. Best time to buy a stock is when nobody is looking at it.
Would you mind to connect with me @futuristicstock twitter handle?

Anonymous said...

Hi Whatupji,

Your inputs on Manugraph as on today? It seems to be in this range from past 7 yrs.