Tilaknagar Industries: Market Leader in Brandy!!.. Kingfisher Loosing ground.??.

We are all well aware than "Mansion House" Brandy is the most popular Liquor brand of Tilaknagar, we also know its a millionaire brand (sells more than a million cases every year) 84% of sales is Brandy for Tilaknagar, Volume wise 4.98 million cases of brandy was sold by tilaknagar in year ending March 2018

I would assume atleast 2.5 - 3  milllion cases would be just Mansion house brandy.. and rest would be Courrier Napoleon (semi-premium range)

the question is what are the ground realities... actual data from the ground level .. Liquor being a controlled product and heavily taxed and a source of revenue.. govt data is available.. though not easy to mine or to extract..

I have got data for Kerala State and presenting raw data here for every one.

- Every month what ever liquor is selling its replaced from warehouse.. so that each store has the liquor which is selling (in demand) and not something the public does not want..

As can be seen for location : "BLM Overbridge" most selling Brandy is Mansion House.

with 10.60% replacement market share

The other important thing worth mentioning is that this list did not contain.. Honey Bee Brandy or Mcdowell No1 Brandy..(largest selling brandy brands in India & the world) so either Mcdowell No1 & HoneyBee is being discontinued .. or the cheaper brands have to be pushed by the Supplier and demand is not generated!! (I'm guessing/speculating based on data available..) 

Another important thing is Kingfisher brand of beers seems to be trailing to " British Empire Ultra Premium Beer" [SNJ Breweries Pvt limited] by huge margin..

this is not good news for United Breweries shareholders.. I hope they have their ears on the ground to face the challenge .. and nip it at the bud!!..

Raw data for "BLM Over bridge" location in kerala has been provided for all to evaluate and make an informed decision.. (its a bit too long so please right click and open on a new tab to see it in detail)

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you can see data for whiskey - vodka & rum also for "BLM Overbridge" location to get an idea about what's selling in Kerala in March/April 2019!  

PN: "BLM Over bridge" is just one sample location and not necessarily a good sample.. so please do your own  deep dive to come to any conclusion... this is my own study for my own personal review.. not a comprehensive industry wide database.. 

Conclusion: Tilaknagar has a MCap of just: 188cr ..& sales of 1800cr (approximately for march 2019 guess-estimate) and its the market leader based on ground realities (data from kerala) .. Its definitely very cheap for a market leader in Premium brandy space.. and over the next 10 yrs we can easily expect Tilaknagar to be a multibagger (once it gets its debt fixed..) Tilaknagar is an 86yrs old company so Tilaknagar Industries has seen its fair share of up & down days & should be still around for decades to come..   Good time to add/invest when stk is at rock bottom..

United Breweries seems to have a new challenger[SNJ Breweries Pvt Limited] and needs to pull up its socks ..else  it could very well see the floor disappear from under its feet..

PN: I am not a sebi registered investment advisor, this is just data based on my person research and its not comprehensive... Please do your own research and consult a registered investment adviser before investing.. I do have investments in Tilaknagar Industries.

Tilaknagar: Liquor consumption in Kerala

Tilaknagar Industries

CMP: 13.50, Market Cap:172.4cr

Kerala is the largest liquor consuming state in India .. and fortunately data is available for Kerala at 

http://ksbc.kerala.gov.in/ website.

The interesting fact is "Brandy" is the most consumed Indian Made Foreign Liquor consumed in Kerala .. RUM is second and then down the line is whiskey..

Top Selling Brands in Kerala:(April 2019)

No:1) No1 Mcdowell  Brandy : 13.19% market share

No:2) No1 HoneyBee Brandy :  7.40% market share

No:3)OLD Port Deluxe RUM : 6.29% market share

No:4)JAWAN SPECIAL XXX RUM: 5.98% market share

No:5)CLASSIC GRANDE MATURED XXX RUM: 3.49% market share

No:6)MCDOWELL NO1 CELEBRATION RUM: 2.78% market share

No:7)COURRIER NAPOLEON GOLD BRANDY: 2.75% market share (Tilaknagar Brand)

No:8)MANSION HOUSE FRENCH BRANDY: 2.52% market share (Tilaknagar Brand)

No:9)FARMERS XXX RUM: 2.38% market share

No:10) WHITE MISCHIEF CLASSIC BRANDY: 2.26% market share

no doubt the market leader is United spirits with 3 brands in top 10 and with 23%+ market share its a commanding lead over everyone else... but we are looking at tilaknagar and where does tilaknagar stand in this "rat race"

Lets add the price/"Landed cost" of 750 ml case for above mentioned top 10 selling IMFL in kerala state

No:1) No1 Mcdowell  Brandy : 13.19%, Landed cost: 631.06

No:2) No1 HoneyBee Brandy :  7.40%, Landed cost: 631.06

No:3)OLD Port Deluxe RUM : 6.29%, Landed cost: 514.81

No:4)JAWAN SPECIAL XXX RUM: 5.98%, Landed cost: 426.55

No:5)CLASSIC GRANDE MATURED XXX RUM: 3.49%, Landed cost: 572.45

No:6)MCDOWELL NO1 CELEBRATION RUM: 2.78%, Landed cost: 585.07

No:7)COURRIER NAPOLEON GOLD BRANDY: 2.75%, Landed cost: 613.33 (Tilaknagar Brand)

No:8)MANSION HOUSE FRENCH BRANDY: 2.52%, Landed cost: 928.32 (Tilaknagar Brand)

No:9)FARMERS XXX RUM: 2.38%, Landed cost: 427.49

No:10) WHITE MISCHIEF CLASSIC BRANDY: 2.26%, Landed cost: 651.15

So as everyone can see.. at the premium end of the market... the top selling IMFL in kerala is "Mansion House Brandy" priced @ 928.32 (landed cost) 

I did some more digging into the top 20 brands in kerala and other top 20 brands with price above 900/- are

Ranked 13 MCDOWELL VSOP BRANDY: 1.65% market share, Landed Cost: 921.15

so in the top 20 selling brands on IMFL in Kerala the largest liquor consuming state in India.. 

Tilaknagar Mansion House brandy is most selling premium IMFL with 2.52% market share

2nd spot goes to MCDOWELL VSOP BRANDY with 1.65% market share..

Tilaknagar "COURRIER NAPOLEON GOLD BRANDY" is the brand that Tilaknagar is planning for competing for market share with United Spirits brands. Honey Bee & MCD No1 Brandy. priced close to Honey Bee & Mcdowell No 1 Brandy..

Landed Cost of Tilaknagar Brands & United Spirits Brands (above)

top selling brands in kerala for the month of April 2019(below)

recently govt has mandated that companies need to report their borrowing levels to the stock exchanges.. and Tilaknagar Industries has reported a borrowing of 280cr .. in BSE website..

United spirits reported 750cr of borrowing

Conclusion: Tilaknagar is going full steam ahead with cleaning its books.. and with premiumisation strategy.. @175cr market cap with 280cr of debt as of March 2019... company seems to have turned the tide.. the books will start looking a lot more presentable next year... expect the stock price to start ticking up.. as market takes notice of the change in fundamentals.. 

PN: this is not a recommendation service.. its my thought process or brain dump..for my own tracking purposes.. please consult a SEBI registered  investment advisor before investing...

Tilaknagar is being accumulated??

Tilaknagar Industries

CMP: 15.30 Market Cap: 191.14cr

Tilaknagar was discussed on December 04,2017(Link) .. the logic was the stock had just turned bullish..stock price was: 21.55... 200Day EMA:14.45,  50 Day EMA:16.59 

So the golden cross was formed (50 Day EMA (16.59) crossing the 200 Day EMA (14.45) from low to high) ... since then tilaknagar stock has corrected to around 200 Day EMA .. but some interesting developments have happened.

New investors have accumulated the stock.

If you see latest june 2018 shareholding data..

The largest public Shareholder in Tilaknagar on june 30,2018 is:

Aqua Proof Wall Plast Pvt Limited holding: 40,58,530 shares.

In March 30,2018 the largest shareholder in Tilaknagar was:

Aqua Proof Wall Plast Pvt Ltd. holding: 26,09,043 shares.

In Dec 30,2018 there was nobody from Public holding more than 1% shareholding.. which means at the max Aqua Proof Wall Plast Pvt Ltd was holding less than 12,47,5612 shares.

so in past 6 months (Jan 2018 to 30 june 2018) Aqua Proof Wall Plast Pvt Ltd has purchased: close to 30 lakh shares of Tilaknagar from the open market..

If we dig deeper.. we find that one of the directors of Aqua Proof Wall Plast is also a director in Anand Rathi Securities.

Also Anand Rathi Securities has given loan to tilaknagar promoters (loan against shares) shares pledged is: 5,00,00,000(5 cr shares) 

===============

In March 2018 results .. balance sheet statement show that tilaknagar has some 66-67cr in cash in hand...

further digging shows that Tilaknagar of 15 May 2018 paid and closed(paid back all dues) .. a loan from Edelweiss Asset reconstruction company..worth 65 cr..

if we piece all the parts together.. 

1. company has been reporting losses but on march 2018 balance sheet.. tilaknagar had some 66-67cr in cash.. 

2. On May 15,2018 tilaknagar pays off some 65cr of loan(closes the loan: Date of Satisfaction) 

3. we see Aqua Proof Wall Plast aggressively buying into tilaknagar stock.. (40 lakh shares in 6 months..)

4. we also see tilaknagar issuing stock options to top management @ rs13/- per share..

If we take all these pieces together ... I'm certain.. Tilaknagar has turned the tide... and is on the way to recovery. very rapid purchase of equity by Aqua Proof wall Plast indicates we are about to see some positive announcement which will change the view of the market toward tilaknagar..

I would say its time to back up the truck and load up on tilaknagar.. 

PN:  I am not providing any investment advice.. its a blog of my thought process  ... for me to review based on which i take my investment decision.. Please do your own deep dive and consult a SEBI registered investment consultant before investing..

Ester Industries: Value Added Products

Ester Industries

CMP: 48.8

MCap: 406.96cr

Sales: 824.5cr

Net Profit: 5.29cr

http://www.esterindustries.com

Customer satisfaction through Innovation, Development and Partnership

Backed by 30 years of industry expertise, Ester manufactures Polyester Films, Specialty Polymers and Engineering Plastic compounds. Polyester Films find applications primarily in flexible packaging while Specialty Polymers find applications into niche areas including rigid packaging, textiles etc. The Engineering Plastics business processes various materials for industries like Automotive, Electrical & Electronics, Appliances and Telecom. We take pride in offering complete solutions to our customers even for their most demanding needs. We also partner with our customers to derive a sustainable competitive advantage through customized development projects.

Ester Industries Stock has corrected from a high of 78 to 48.8 a 37% drop from its 52 week high..

and quoting close to its 5 yrs (999 days) EMA (exponential moving average) of 42.36.

As you can see the stock bounced back from its 999day EMA levels before..

The company has a pretty good cash flow from operations .. 5 yrs Avg Cash Flow from Operations is: 53.74cr (5 yrs Average!! Wow) while 5 yrs avg Net Profit is 0.33cr.. (profits seem suppressed)

If we look at the Income (Profit Loss ) statement the company has been reporting low profits consistently..

Will the low profit margin change in the future??.. I think so.

1. Company in the past few yrs has been trying to increase its Value added business where margins are better.

2. Company signed an agreement with Dupont in past few yrs to do joint development of products using Dupont ingredients.

3. Based on this agreement and Esters R&D ...Ester has developed number of new products & has filed Product & Process Patents (which have been accepted in US)

4. Shaw Industries Group Inc USA which is a Berkshire Hathaway (Warren Buffett) company and largest carpet manufacturer in the world. Shaw Industries has approved "Stain Resistant Master Batch MB-03" This will impart permanent Stain Resistance to nylon carpets  this is agreement for 90cr worth of sales (2500 tonnes) every year..

This Agreement is for sales of about 90cr.. which is like 10% of its annual sales of 800-900cr..

But I believe every carpet manufacturer would like to sell "Permanent stain resistant carpets" so I'm sure other companies(competitors) will also follow suite and purchase from Ester Industries. Stain Resistant carpets could be the norm .. rather than an exclusion... as carpets are long term purchase item and every manufacturer would prefer stain resistant carpets..

If you look at the March quarterly & year end data.. Q4 Quarterly Profits are 5.42cr and Full year end Net Profit is: 5.58cr... Considering 5 yrs avg Operating cash flow of 50cr.. I would say reporting 25cr net Profit should not be that difficult.. with the new patents and related products sales .. I expect significant Margin improvement .. we can expect over the next few yrs that Ester can report 45-55cr net profit.. which is a 10x increase in Net profit..

there are already 4 products which are patent protected which have been accepted by customers..

with agreement with Dupont.. you can directly get acceptability and open number of doors to new clients..

There are some things of concern such as almost 15% shares in public domain are held by one company  Vettle International limited.. and these shares were issued @ rs 10 per share.. Vettle International initially had some 20% stake and has been selling some stock which could put downward pressure on stock price

Ii would say issuing 20% stake to an unknown company is not possible by promoters.. so Vettle is part of public holding .. but definitely known to the promoters indirectly.

Conclusion: Ester produces value added products using commodity petroleum products.. with agreement with Dupont and getting patent protected products in the market is a big leg up and should improve margins. Company has good cash flows and can easily report 10x increase in profit in the near future.. Stock is attractively priced and available close to its 5 yra EMA (42.36)

 Investor Presentation Q4-2018

Birla Precision Technologies: Comeback kid!!

Birla Precision Technologies

CMP: 8.17

Market Cap: 43.02Cr

Sales: 155.37Cr (March 2017)

http://www.birlaprecision.in/company-profile.html

Birla Precision Technologies Ltd (BPT) the erstwhile Birla Kennametal Ltd was established in 1986, as a joint venture company between YBG (Yash Birla Group) and Kennametal Inc, USA In July 2007. YBG acquired the stake of Kennametal in the JV consequent upon which Birla Kennametal was renamed as “Birla Precision Technologies” (BPT). BPT continues to be a primary vendor of Kennametal worldwide –USA, Germany and APAC supplying rotating tool holders in AT3 class. Besides, BPT also exports in a large way to other major customers in the USA, Europe and in recent times to the Far East including China

Leveraging its core competency of machining, forward integration into machining of precision components and castings was a natural progression and catering to global giants like Cummins, Knorr-Bremse, Husco International .

Yash Birla Group sold its Dagger Frost cutting tool division to Samvardhana Motherson Group (SMG) in 2009 .. though the remains of the cutting tool business with Yash Birla Group is a division of Birla Precision called "Indian Tools Manufacturers" https://www.indiantool.com/

The other division is: Birla Kennametal division which makes rotating tool holders AT3 Class.. Here Kennametal shareholding has been bought by Yash birla Group and name of the company was changed from Birla Kennametal to Birla Precision Tools. http://www.birlaprecision.in/index.html

The third division is "machine casting division" which makes Automotive components and exports it to automotive customers like Cummins and Honeywell.. this division was done in collaboration with "Perucchini of italy"

Birla Precision had debt restructuring and as part of it all companies related to automotive tools have been merged into Birla Precision as separate divisions mentioned above.. (consolidation of business) 

Now the promoters have recently (April 13,2018) passed a resolution for preferential allotment of shares to promoter company in Birla Precision. 

The company shares are also at rock bottom prices and turned bullish (golden Cross)

Conclusion: Book value is 18, cmp is: 8.17 and has recently shown some movement..

Considering the consolidation of all automotive and tools related business with Birla Precision and the subsequent preferential allotment to promoters.. Birla Precision looks like a long term bet on the Yash Birla group turning the company profitable.. Birla Precision has all the right ingredients just needs to think big.. and work towards it.. Invest is my view..

PN: this is not an investment advice.. it is my though process and a timeline for my point of view.. Pls consult a SEBI registered advisor.. and do your own deep dive..

=happy investing

whatsup-indianstockideas.blogspot.com

Manugraph: Bullish undertone..

Manugraph

CMP: 47.5 Mcap:144.47cr..

Was just looking at Manugraph.. 

Feb 7,2018 outcome of Board meeting states:

Board approves proposal to merge 100% subsidiaries and group companies with Manugraph..

WOW!!! Thats BIG Really BIG News!!

now if I look at companies with similar addresses as manugraph

it states there are 2095 companies with similar addresses.. I checked a few... not all 2095 companies have same promoters as manugraph..(the one marked is not a promoter company)  but to say the list above is the complete list of companies owned by promoters would also be wrong..

So all said and done.. the statement that promoters are going to merge group companies into manugraph.. means we are going to see value unlocking.. 

predicting when that will happen .. would be speculating.. 

No of shareholders:

Dec 2017: 11,221 

Dec 2016: 11,942

Dec 2015: 12,248

Dec 2014: 11,873

Dec 2013: 12,404

lowest no of shareholders in past 5 yrs!!

Lets close by saying this is an interesting development to be kept in mind.. with bullish undertones..

=happy investing

whatsup-indianstockideas.blogspot.com

Eastern Silk: Discounted stock.. Exporter of Silk

Eastern Silk Industries

CMP:3.40

MCap: 27.08cr

March 2017: Sales:63.42cr, Net Profit: 45.06Cr

http://www.easternsilk.com/

ESIL a Kolkata based company incorporated in April 9, 1946 before Independence and it got its current name in 1975. The chairman is Mr. Shyam Sunder Shah. The company is engaged in various multifaceted activities like manufacture of silk yarn, fabrics and made ups, home furnishings, fashion fabrics, double width fabric, scarves, laces, melts and embroidered fabrics.

The company has been recognized as a Golden Star Export House by the Government of India. Sales are mainly from export markets. US and Europe account for about two – third of the company’s exports. Other export destinations comprise Australia, Middle East, Canada, Japan, New Zealand and Scandinavian & EFFTA countries. Its equity shares are traded on the Bombay Stock Exchange and National Stock Exchange.

ESIL is one of the largest high – end fabric manufactures in the World. Facilities at ESIL’s factory and design center are constantly upgraded as new technology is developed, to keep it on the cutting edge of industry. A wealth of technical and designing expertise accumulated over the years is put to work in developing new designs/blends.

The engineers, technicians and Supervisors in the production units are experienced and well qualified. The production is done round the clock. The whole production units are humidity and temperature controlled. The highly automated production facilities and through control systems are both highly efficient and environmentally friendly.

Manufacturing Facility

ESIL is a composite unit having the entire operations from softening, widening, doubling, twisting, dyeing, weaving and embroidery to finishing under one roof. Sophisticated processes from design to weaving are performed by the latest computerized systems,. The result is a co oriented and continuous operation that provides maximum efficiency and productivity. These steps have boosted ESIL’s reputation as a producer that can respond to customer demands for unique and sophisticated products.

Design Studio

ESIL has made an impact on global decorative fabrics industry with its world class designs and technology as well as diverse product lines, ranging from pure silk to blends from decorative furnishings to bridal wears. ESIL is constantly expanding its line up of value – added products and extending global distribution network to improve the quality of services it provides to their worldwide customers.

unit 1: 

411, Telugarahalli Road, Anekal

Bangalore – 562 106

unit 2:

No.39, Kammasandra Agrahara,

Kasaba Hobli, Anekal,

Bangalore – 562 106

unit 3:

Plot No. 209, Phase 3

Bommasandra Village,

Attibele Hobli

Bangalore - 560099

unit 4:

Falta Special Economic Zone,

24 Paraganas (South)

West Bengal

The company was referred to BIFR (Board for Industrial & Financial Reconstruction) but in Dec 2016 the company was removed from under BIFR. The company has been paying back its dues to banks/financial instutions and ARC (Asset Reconstruction Companies) on a one time settlement basis.. all these One time settlement done with ARC & Lenders by the company has resulted in 119.96Cr Waivers (last year: 58.24Cr)

Another point worth mentioning is that the company has Preferential capital of 14Cr while Equity capital is: 15.79Cr.. Preferential capital is supposed to receive preferential dividend which the company has not distributed so most likely the equity shares will not receive any dividend in the near future (preferential capital has first right over dividend distribution..)

Looking at the stock price the stock has been in dumps and it seems to be just turning around.. at current prices there is not much to loose..

if you look at the cash flows from operation

March 2017 Cash Flows from Operations before Exceptional Items: 29.19Cr

March 2016 Cash Flows from Operations before Exceptional Items: 30.38Cr

March 2015 Cash Flows from Operations before Exceptional Items: 7.92Cr

March 2014 Cash Flows from Operations before Exceptional Items: 47.74Cr

March 2013 Cash Flows from Operations before Exceptional Items: 6.41Cr

 5 yrs avg cash flow from operations: 24.32Cr

Forgot to add export data.. (latest that I have .. pls dont ask how i got it.. :-))

Conclusion: Eastern Silk is a well established company.. with regular exports from Bangalore and Calcutta.. Preferential equity means most likely no dividend payout by the company to equity shareholders .. The company as such seems to be well established and has positive cash flows.. With the change in govt attitude and banks lending to only solvent companies we can expect companies to start reporting profits... in year 2011 Eastern silk had sales of 600cr @ Mcap of just 27Cr when 5 yrs avg cash flow from operations is:24.32Cr I think its highly undervalued and we can expect market to give it a better capitalization in the future as the company fortunes turn for the better... Stock price seems to be just rising above its lows breaking above the 5 yrs EMA: 3.88.

PN: this is a blog of my thought process.. pls do your own deep dive before investing.