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reetesh
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Joined: 01/Sep/2006
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   Topic: Hawkins Cooker-When will the whistle blow
Posted: 05/Sep/2006 at 1:35am |
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Basant we talk about Hawkins Cooker couple of days back, you said it is trading some 11 times trailing twelve months means FY-07 earning that means its EPS would be Rs.7, but I think profit for this year would be around Rs. 10cr. if they maintain same level of growth and margin, margin you expect them to improve because of raw material cooling of like steel and aluminium. Please let me know how did you get to this figure and if I am correct in my assumptions?
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basant
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Posted: 05/Sep/2006 at 1:51am |
Guess this is whjat I wrote:
"The CMP Rs 91 iis discounted less then the 13 times trailing and at a market cap of Rs48.56 crores it appears very cheap (the Hawkins brand would be worth the full market"
Trailing means I was doing Fy 06 this year they should do about Rs 12 - Rs 13 (buying is more in the festive season Oct - March)
Yes margins should be better its RoE is also good ( 25%+) the not sure why it si not moving.
About input costs going down yes, that should benefit the company but I do not think that even when they had gone up you would have a problem passing the cost of a steel and aluminium in a cooker ; the demand is price inelastic and people buy cookers because they need one it is not a luxory item just think a family buys one cooker in 2-3 years and that too we are spending Rs 500 on it.
Since it is a micro cap no Inst./Mf would be interested but while that is an opportunity it is for the very patient investor.
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jstk
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Joined: 14/Sep/2006
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Posted: 16/Sep/2006 at 12:37pm |
Hawkins june qtr nos have been excellent. Sales have increased [ 30% yoy - althogh on a small base ] & margins have expanded .The tax outgo has increased as past losses have been wiped out last.
I agree with BM's views that the demand for the product is not completely price dependent.
In the case of cookers [ as in so many other things in our life  ] ,here the 'lady of the house' decides and she wants to make sure that she uses the best product / does not compromise- as this is a daily used product and benefits of a superior product in the cooker category range from faster cooking time / lower gas consumption to showing off the newest model to your neighbour  !!
The Hawkins brand is very firmly entrenched in the consumer minds over tha last 4 decades and the export potential [ 90% of indian family abroad use a cooker for the dal / rice / sambar ] for their top end line [ futura ] is huge.
Also with Fringe benefit tax issues pertaining to Institutional sales [ for gifting to staff etc ] sorted out, i feel confident that this company is going to break new paths in the coming new years.
Also they now a new CEO from IIM [ he has been with the co for sometime ] and Brahm Vasudeva is a non exec chairman now.
I am confident that this year's EPS will be in the range of 19-22 depending on how the season sales pan out.
At the current price of 89, Hawkins Cookers can cook up some serious profits !!
rgds, jayendra
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If you buy for a non-value reason, you will end up selling for a non-value reason.
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basant
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Posted: 16/Sep/2006 at 1:02pm |
as in so many other things in our life ] ,here the 'lady of the house' decides and she wants to make sure that she uses the best product / does not compromise- as this is a daily used product and benefits of a superior product in the cooker category range from faster cooking time / lower gas consumption to showing off the newest model to your neighbour !!
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This is a very important piece of observation. Can we think of some other products in growing businesses. Not VIM and Surf since they are already discounted by the market.
Edited by basant - 16/Sep/2006 at 1:03pm
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kulman
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Posted: 16/Sep/2006 at 1:10pm |
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Instantly it came to my mind that there is a brand called "ScotchBrite"-scrubber, which is used while washing utensils. It is made by 3M, well known MNC.
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Life can only be understood backwards—but it must be lived forwards
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Equity Buff
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Posted: 16/Sep/2006 at 1:40pm |
I think Hawkins is a good stock and can deliver good returns for the patient investor. Mr. Basant has put EPS estimate for Fy 07 at Rs. 12-13 and Mr. Jayendra has put EPS estimate for FY 07 at Rs. 21-22. Mr. Jayendra since your estimate of EPS is a lot lot more bullish, pls inform, if possible, your reason for this aggressive bullishness.
Thanks
Equity Buff
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basant
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Posted: 16/Sep/2006 at 1:44pm |
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I have been following 3M while it is a BIG company in the US the management has not tried to penetrate into India. The stock is being recomended for over 10 years now - yes 10 years and it has kind of gone nowhere because the parent has not been interested. Now many could say that there lies the opportunity but I would say that this opportunity is uncertain. What happens if 3M decides to come to India with full force in 2010? The opportunity cost of capital is very high. But if 3M decides to move the stock could run!
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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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jstk
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Posted: 16/Sep/2006 at 3:28pm |
Traditionally the 1st qtr is the weakest for Hawkins [ loss reported in june qtr 03 , june qtr 04, june qtr 05 ] . This year the 1st qr has been very good with an eps of 3.61 [ no extraordinary / non recurring income ].
For 05/06 excluding the june qtr , eps for the year was 11.5
co has declared a Rs.5 dividend for last year indicating their confidence in the future.
large format store sales are also looking strong. The next 3 qtrs should be very good and an eps of 19-22 looks achievable.
also RKJ used to hold nearly 4% in the co till around 2 yrs back ......i'm not 100% sure but he still holds just a little under 1%. Although this has not been one of his most succesfull investements, the very fact that he was an investor is proof enough of the potential.
The company is a 'late bloomer' but now looks well entrenched on the growth path.
jayendra
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If you buy for a non-value reason, you will end up selling for a non-value reason.
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