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Home Kamdhenu – Multibagger Stock For the Month of May 2018

Kamdhenu – Multibagger Stock For the Month of May 2018

Price – Rs. 236.20

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About the Company

Kamdhenu Limited (“Kamdhenu” or the “Company”) is the market leader in branded TMT Bars and ‘Kamdhenu TMT Bar’ is the largest selling TMT Bar in India.

The Company follows franchisee business model and has 70+ Franchise Units to manufacture steel rebars, structural steel products & Colour coated Profile Sheets. Kamdhenu has committed chain of over 10,500 dealers and distributors in India out of which 6,500 are exclusive for steel business.

Kamdhenu has forayed into decorative paint business in 2008. Its product portfolio under the brand KAMDHENU PAINTS-COLOUR DREAMZ includes Exterior Emulsions, Interior Emulsions, Acrylic Distempers, Enamel Paints, Cement Paints, Wall Primers & Putty, and Texture & Designer Finishes, Stainers, P.U. Wood Finishes and Metallic Finishes. Kamdhenu Paints has 4,000 dealers and distributors spread across the country.

Particulars

FY14

FY15

FY16

FY17

Revenue (In Rs. Cr.)

921.71

967.99

841.19

825.48

Growth

5.02%

-13.10%

-1.87%

EBITDA (In Rs. Cr.)

24.99

29.93

31.62

33.16

EBITDA Margin

2.71%

3.09%

3.76%

4.02%

PAT (In Rs. Cr.)

5.95

8.03

8.15

9.83

PAT Margin

0.65%

0.83%

0.97%

1.19%

EPS (In Rs.)

2.54

3.43

3.48

4.20

EPS Growth Rate

35%

1%

21%

Historic P/E (Closing Price of 31st March)

8.25

12.06

12.90

21.11

CURRENT P/E

42.78

Shareholder funds

93.99

99.51

105.68

115.51

Debt

85.15

97.29

105.81

105.43

Cash

8.93

9.99

10.17

9.79

Ratios

D/E

0.91

0.98

1.00

0.91

Interest Coverage

2.20

2.30

2.19

2.43

ROCE

13.95%

15.21%

14.95%

15.01%

ROE

6.33%

8.07%

7.71%

8.51%

WHAT’S DRIVING THE STOCK

Government Initiatives –

  • Affordable Housing – The market potential of affordable housing projects in the country is expected to touch Rs. 6.25 trillion by 2022.
  • Housing For All – India will need to construct 43,000 houses every day until 2022 to achieve the vision of Housing for All by 2022.

Asset Light Business Model

The Company’s “Franchisee Business Model” enables the Company to earn higher revenue due to royalty income, without investing in manufacturing activity.  Under this model, Kamdhenu offers franchisee manufacturers its brand name and assistance in technology, quality, consistency and marketing of Kamdhenu range of products.

Huge Capacities at Zero Capex

KamdhenuThe Company operates through 70+ franchise units across the country and one Company operated plant at Bhiwadi is being used as a training centre for all technical staff deputed at the franchisee’s unit.

Manufacturing Capacities – Franchises

Production Capacity :

  • Steel Rebars – 25 Lacs MT per annum
  • Structural Steel – 5 Lacs MT per annum
  • Coloured Coated Profile Sheets – 2.5 Lacs MT per annum

Company Owned – Manufacturing, R&D and T&D

Steel Division : Bhiwadi

Small capacity of 72,000 MTPA to support innovation and product development

Strong Product Portfolio for all User Segments

  • Kamdhenu TMT Bars – TMT Bars are thermo mechanically treated through leading world tempcore based technology for high yield strength.

  • Kamdhenu SS 10000 TMT Bars – TMT Bars are thermo mechanically treated through leading world tempcore based technology for high yield strength.

  • Kamdhenu – Nxt TMT – Next Generation Interlock Steel and has got the angular double rib design having obtained all the rights to manufacture, market and sell double rib TMT bar.
  • Kamdhenu Structural Steel – Produced under franchisee agreement multitude of special contours such as angles, channels, beams, flats, round & square.
  • Kamdhenu Colour Max – Colour Coated profile sheets – versatile colour metal products make dream building look stylish and elegant.

  • Kamdhenu Paint – Offers a basket of 40+ SKUs of Exterior and Interior Emulsions, Designer Finishes, Stainers, distempers etc.

WHAT’S DRAGGING THE STOCK

Expensive Valuation Available at PE of 47x – the stock price has appreciated 190% in one year

Competition in Steel Segment

Intense Competition in the Paint Segment