Pincon Spirit Ltd (hidden gem pick by The Ace Investor)

About The Company & Business
Pincon Spirit Ltd (PSL) is headquartered in Kolkata, West Bengal.
The company incorporated in 1978 is promoted by Mr Manoranjan Roy who was recently awarded Outstanding Entrepreneurship Award for outstanding and exemplary achievements in Entrepreneurship from Enterprise Asia at the Asia Pacific Entrepreneurship Awards 2015.

PSL is in branded IMFL business. Product portfolio includes: Highland Blue Deluxe Whisky, XXX Rum, King's Coin Vodka, Pincon 9000 Beer. The company also deals in country spirit and edible oils.

The corporate office of the company is located in Bengaluru. The company is having its factories in Kolkata, 24 Paragnas and Agra (U.P).

PSL is listed on the BSE via direct listing norms and it has also submitted the application to list on NSE last month.

Kuntal Chatterjee is the COO of the company. Mr Chatterjee was a part of Allied Blenders & Distillers the makers of Officer's Choice which is a very successful brand. Mr Chatterjee has also held responsible position at Diageo.

The Ace Investor - Value Pick
PINCON SPIRIT LTD.
BSE: 538771
PSL is currently trading around 115 with a market cap of around 120 crores.
Total Debt is around 62 crores, 52 week high is around 200 and 52 week low is around 70.

PSL is having presence in the sates of West Bengal, Assam, Arunachal Pradesh, Jharkhand, Orissa, Sikkim, and Daman. The company is having its own brand in multiple states and is also having state specific brands.

PSL is aggressively building a brand-business, Recently the company has started electronic media promotions for its Highland Blue Whisky via Music CD Ads in W. Bengal and it has also opened 7 liquor retail outlets at prime locations in Kolkata. The company has also announced plans to market its recently launched XXX Rum and Orange Gin via Music CDs.

PSL is going to invest INR 400 crores on expansion over next two years, While around INR 120 crores will be funded through internal accruals remaining will be via Bank Loan and Market Borrowing.

Currently, PSL is having IMFL production capacity of 1.2 million cases a year and it plans to increase it to 3 million cases over the next two years. PSL is going to launch its IMFL products in four high liquor consuming states of Tamil Nadu, Andhra, Telangana and Delhi in phases.

The company is also looking at alternative packaging strategy to boost its sales, It is investing 6-8 crores in its bottling plant in Rajarhat to introduce tetrapaks for some of its brands. Tetrapek offers an opportunity to retail less than the conventional 180ml bottles which increases sales for economical liquor companies as seen in state of Karnataka. PSL is also planning to invest Rs 50 crores to acquire some bottling plants, one being the country spirit bottling unit at Kharagpur with a capacity of 3 lakh bottles per day and another in Burdwan with a capacity of 2 lakh bottles per day.

Coming to the financials, PSL has grown really well in the recent times. Take a look at the results table below :-


From sales of around 100 crores in FY11, PSL had grown to 380 crores+ sales in FY14 and now so far in the nine reported months of FY15 it has already reported topline of more than 420 crores and at end of FY15 it is expected to post sales of 575 crores and a net profit and eps of around 14. Looking at the growth and expansion plans it looks like PSL will meet its managements guidance of 1500 crores topline in FY18 and that will take the EPS to about 34.

From sales of around 100 crores in FY11, PSL had grown to 380 crores+ sales in FY14 and now so far in the nine reported months of FY15 it has already reported topline of more than 420 crores and at end of FY15 it is expected to post sales of 575 crores and a net profit and eps of around 14. Looking at the growth and expansion plans it looks like PSL will meet its managements guidance of 1500 crores topline in FY18 and that will take the EPS to about 34.

On the valuations front, with FY15 EPS of about 14 at current price of 115 the P/E ratio comes at around 8.25. The industry average p/e of the sector is around 69.

PSL can be directly compared with brand-centric Som Distilleries & Breweries Ltd which is trading at a P/E 30 that too despite the fact that SOM has not been growing fast like PSL. Another company in this sector is Tilaknagar Industries (TIL) which was trading at a p/e of around 17 before it started reporting losses and inconsistent results. TIL too is actually not a high-growth company like Pincon so it cannot be a taken as a benchmark and other company called GM Breweries Ltd which is trading cheaply does not have any aggressive brand business and retailing its products cheaply with no brands to show.

Note: Regarding the promoter holding, Much like ITC the promoters have declassified themselves as non-promoters but see the shareholding pattern almost 30% is with Mr Roy and another 30% lies with board member owned companies and other Kolkata based groups. Which means about 60% of the equity is with people running the company.

All in All i feel, PSL is a great opportunity for long-term investors and looks set to be a multibagger. At 115 or even at 200 it looks a great potential multibagger stock to buy with eyes set on growth.

If we take a modest P/E of 20 then Pincon Spirit Ltd should be currently trading at around 280 and if we take the FY18 expectations of 1500 crore top-line then with EPS of around 34 at P/E of 20 the stock price should be 680. Remember high growth companies attract expensive P/E rating. NSE listing is imminent now and it is expected to trigger major re-rating in this stock.

:Links:
Pincon Website: https://pinconspirit.in/

Pincon Annual Results: https://www.moneycontrol.com/financials/pinconspirit/results/yearly/PS18#PS18

Pincon Nine-Month Results So Far: https://www.moneycontrol.com/financials/pinconspirit/results/nine-months/PS18#PS18

Pincon Expansion News: https://articles.economictimes.indiatimes.com/2015-04-24/news/61493977_1_400-crore-imfl-next-two-years

Pincon Tetrapak News: https://www.telegraphindia.com/1150425/jsp/business/story_16569.jsp

 

Super duper result by pincon, just checked update by theaceinvestor

 

Really extremely good result.....continuous marvelous growth in topline & bottomline for last 5 years....extreme cheap stock from valuation with P/E = 6 when its peers are in P/E=30....keep in close watch....huge potential to be a multibagger....it is just matter of time to start rocking...

 

Particulars FY11 FY12 FY13 FY14 FY15
Sales(Cr.) 106.55 244.64 320.09 382.57 692
Net Proffit (Cr.) 2.79 6.86 8.48 9.95 16.65
EPS 2.8 6.84 8.46 9.93 17.18
Current P/E = 5.49
Industry Average P/E is more than 40....
.....really it is posting superb result....

 

Thanks @Meenakshi Razdan

@Meenakshi Razdan @Vidhi Khanna @stockguru please share your thoughts/suggestions !

 

Well the report looks good, but I am not in a position to give any thoughts. Meenakshi and Vidhi might give you a better answer. Honestly I think instead of me, you should go and ask a few wine shop owners about the performance of their spirits. They are at ground and they would know much more about it's products than us.

 

Also have a look at associated alcholols & BREWRIES ltd posted in the same forum I think that has a promoter holding of 58% and for 300 cr revenue they have posted 13 cr profit and debt is only 38 cr profit growth more than 40% on five year basis

 

Noticed heavy volumes in Adani power this afternoon ! Is it going to be another Surana solar or am I mistaken ?

 

Suggest don't give small caps the Same PE as large caps. A stretched PE of 12 would be good. Not recommending just an opinion. https://goo.gl/uG1TBg

 

if someone thinks that he uses these brands of alcohol as his favourite brands and these brands are very popular among his friends then he may buy the shares......

 

Just one query... The depreciation value for 2015 fy was less than fy 2014 according to the money control website.... have they tweaked it on purpose or is there a logic.... coz as I know depreciation keeps increasing with every year right... Thanks in advance

 

CAN BUY AT 77

 

When will pincon be listed in nse??

 

Read a news about the promoter of this company arrested for cheating a nationalised bank... opine about that... is it still safe to own the stock when credibility of management is questionable

 

Any update why promoter is not having a single % share holding

 

Promoters hv declassified themselves as non promoters.. like itc... but owner and member of boards owm 60%of shares...

 

Thanks

 

Good q1 results... trailing ttm is 18.. current p/e <10.. company wants to discuss issuing dividends of 0.50rs fr 10 rs fv stock and also plans to issue bonus share is being discussed in next AGM .. anyone wants to discuss negatives of the company

 

Also revenue is increasing exponentially. .. so want to know if der is any catch... can anyone give a critic opinion on this

 

No promoter holding...promoters placed themselves as public...also promoter convicted for fraud case 5 yrs ago ..