We know from past experience that Dolly Khanna’s stock picks should never be taken lightly. She and her magic wand have the uncanny ability to home in on winner stocks and pocket huge multi-bagger gains.
Dolly Khanna’s latest stock pick is Nandan Denim. In the March 2015, she scooped up a big chunk of 5,06,754 shares.
In an earlier piece, I conducted a detailed analysis of Nandan Denim. I also made the bold assertion that Dolly’s logic of investing in Nandan Denim is quite clear on the basis that this ultra micro-cap is growing at a fast pace and that the growth in the economy will boost consumer spending and reflect in the growth of Nandan’s revenues.
Now, fortunately, we have the benefit of an expert analysis from Sunidhi Securities.
Sunidhi has conducted a thorough analysis of the entire Denim industry and of Nandan’s role in it. At the end, Sunidhi recommends an investment on the basis that:
“NDL has a vision of future growth through diversification in order to survive in a highly competitive environment. This is supported with quality products manufactured by NSL along with fully integrated textile plant to cater to the needs of customers by providing a variety of products under one roof. Further, it has targeted to achieve high volume in terms of quantity and value and also adding the capacity to improve its performance and thereby its share in the market. NDL is also in dialogue with the international brand players for the supply of its products.
NDL has one of the largest denim fabric manufacturing capacities in the world. It is the second largest Denim manufacturer in India and 5th largest in the world. With the recent capacity addition, NDL is well placed to capitalize on the soaring demand of Denim Apparel. The ongoing expansion in its denim fabric capacity and backward integration by expanding its spinning capacity in FY15-16 will result in higher operating margins and improved return ratios.
At the CMP of Rs 73, the share is trading at a P/E of 5.9x on FY16E and 3.1x on FY17E. We recommend BUY with a revised upward target price of Rs. 110 (at a P/E of about 4.8x on FY17E) in the medium-to-long term.”
Now, whether Dolly Khanna will be able to reap the huge gains foreseen by Sunidhi and if so in how much time requires to be seen.