Will you buy a stock which costs only Rs 15 per share and has potential of earning over 80 percent in a year’s time? Shares of Grauer and Weil (India) have jumped 245 percent from a mere Rs 4.50 to Rs 15.24 in last 12 months. So, what is ticking the stock on buyers’ radar?
East India Securities has initiated coverage on the stock with a buy rating and a bullish target of Rs 28 (around 82 percent jump), stating that its market leadership position in the surface protection business boosts it to capitalise on the improving business scenario.
The company has a market capitalisation of Rs 352.30 crore. Its FY14 sales turnover was Rs 385.86 crore with net profit of Rs 30.79 crore.
“Its sales and profits have grown13 percent CAGR and 17 percent CAGR during FY10-FY14 despite slowdown in the economy and is all set to generate healthy free cash flow in next couple of years with low gearing and no major capex required in next 2 to 3 years. Revenues from real estate business will also see a sharp jump as renewal of 40 percent of lease, due next year, and is likely to be at 75 percent increment,” the brokerage says in a report.
Grauer and Weil has 38 percent market share in the Rs 7000 mn electroplating chemical industry. It offers surface treatment products and solutions in chemicals, equipments, paints and lubricants segments. It also has a 10 acre land in Mumbai's western suburb, which has been developed into a Mall – Growel’s 101.
Promoted by Ramanlal Shah and Kanchanlal Shah, as a private limited company, Grauer & Weil (India) Ltd was converted into a public limited company in Feb 1961. However, low cost products from Chinese market are the major concern in chemical business, says the brokerage. On Friday, the stock closed at Rs 15.54, up Rs 1.41, or 9.98 percent on the BSE.
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