Novice investors like you and me owe a debt of gratitude to stock wizards like Dolly Khanna (a.k.a Rajiv Khanna) for being trail blazers and identifying top-quality “hidden gems”.
With my usual diligence, I first reported about Dolly having bought a truck load of Nandan Denim in May 2015. The stock was then at about Rs. 73.
Not surprisingly, Dolly’s entry into Nandan Denim attracted analysts the way bees are attracted to honey. Sunidhi Securities, IndiaNivesh, Nirmal Bang and Karvy vied with each other to project lofty targets for Nandan Denim.
Nandan Denim has lived upto everyone’s expectations by effortlessly touching an all-time high of Rs. 174 on 04.08.2015. The CMP is Rs. 155.
Such is the confidence of analysts in Nandan Denim that Polus Global Fund, a renowned FII, has bet a large sum of money in the wager that the stock will touch Rs. 200 in the next 18 months.
Religare is the latest analyst to be charmed by Nandan Denim. In their latest report, Religare has waxed eloquent about Nandan’s prospects. It says:
“After huge capex investment plan, NDL will create itself as the biggest denim player in India with exports to many countries. We believe demand for Denim will surge going forward mainly due to improving standard of living, rising population and income levels, online sales, penetration in smaller cities, more women workforce and brand awareness.
India’s share in global textile industry will advance because of problems faced by China and other exporting countries. Also favorable government policies like capital subsidy, interest rate subsidy, lower power tariffs and VAT reimbursement have benefitted our textile industry and we foresee the same to continue in the future.
With strong distribution network, proactive management and growing presence, NDL will be able to escalate its market share in denim segment from existing share of 10%. Out of the total capex investment of Rs. 620 crores, 70% is financed with debt and 30% with fresh equity. We expect debt to peak out in FY16. NDL’s operational margins will improve on addition of spinning capacity and value added products in its portfolio.
Net sales and Net Profit surged at CAGR of 23.9% and 34.7% respectively in last 5 years. We expect NDL to grow around 10-15% in following 2-3 years. At CMP of Rs. 150 the company is trading at FY16E PE of 11 and FY17E PE of 9.1 times. We recommend to buy NDL for long term horizon with price target of Rs. 183.”
When I last checked, Dolly Khanna had a big smile on her face owing to the massive gains (~100% in 9 months) that have effortlessly flowed into her kitty. Whether Dolly will have more reason to smile thanks to the recommendations by Religare and the wager by Polus Global Fund requires to be seen!