Basant Maheshwari, our friendly neighbourhood stock wizard, will probably never forgive or forget Hawkins Cookers. The stock has the dubious distinction of causing the demise of his Top 10 stock advisory service. The service was coasting along nicely and Basant was enjoying his time in the sun. However, Basant’s obsession with Hawkins and his calling it his “top pick for 2015” in Outlook Business and the pathetic performance of the stock caused such a firestorm of criticism from his subscribers and the public that Basant had no choice but to abruptly wind up his service.
Dolly Khanna was amongst the first to realize that Hawkins Cookers would be unable to sustain its exorbitant valuations and that it would sink like a bloated ship. However, so as to not alarm her followers, Dolly followed the somewhat surreptitious practice of quietly jettisoning her vast holding a few shares at a time. By this clever process, Dolly brought down her holding to an insignificant level.
Basant Maheshwari never clarified what he did with his holding of Hawkins. Maybe, he also did the sensible thing of jettisoning the stock when no one was looking.
However, the astonishing part is that two ace stock pickers, Megh Mansetta and SBI MF, went the opposite way. They used every dip in the stock price to buy more and more in the fond hope that Hawkins Cookers would regain its mojo and once again bask in the sunshine.
Megh Manseta started the year 2014-15 with a holding of 32,500 shares. He went to the Hawkins counter on four occasions in Feb and March 2015 to buy a further lot of 2000 shares. His holding as of 31.3.2015 stands at 34,500 shares. His holding as of 30.06.2015 is not known.
R. Srinivasan of SBI MF is known to be a die-hard fan of Hawkins Cookers. His SBI Emerging Businesses Fund already holds a treasure trove of 210,000 shares of Hawkins. In addition, he got the SBI Magnum Balanced Fund and the SBI Small & Midcap Fund to buy aggressively in FY 2014-15 and thereafter. As of 30.06.2015, the three SBI Funds collectively hold 392,138 shares of Hawkins Cookers.
Megh Manseta and R. Srinivasan ought to have consulted Dolly Khanna before loosening their purse strings and splurging on Hawkins Cookers.
The Company reported predictably dismal Q1FY16 results. The top-line was flat but the net profit suffered a deep cut of 28%. The stock price plunged nearly 18% to touch a 52-week low of Rs. 2030. It settled 8.74% down to rest at Rs. 2255. This poor operating performance is one of many in a series.
| Hawkins Cooker Ltd – Quarterly Financial Results | |||
| Particulars (Rs. cr) | Jun 2015 | Jun 2014 | % Chg |
| Net Sales | 95.92 | 97.2 | -1.32 |
| Other Income | 0.84 | 1.27 | -33.86 |
| Total Income | 96.76 | 98.47 | -1.74 |
| Total Expenses | 87.7 | 86.37 | 1.54 |
| Operating Profit | 9.06 | 12.11 | -25.19 |
| Net Profit | 5.06 | 7.07 | -28.43 |
| Equity Capital | 5.29 | 5.29 | – |
The stock is still quoting at a P/E of 37. This implies that if the stock does not get its act together soon, there is still a long way to go before we can see the bottom.
Understandably, the punters at MMB were furious at this sorry state of affairs. When I last checked, they were busy making plans to go to the Company’s AGM which is scheduled for today and gherao Brahm Vasudeva and the other top brass of the company and demand an explanation on when the company will get its affairs in order.
Value lies in the eyes of beholder. At 4000+ Hawkins was definitely overvalued. I somehow think, the steep fall for extended time will give enough opportunity for entry. The general uptick across India will boost Hawkins over the long run. The irony is Hawkins had enough backers at 4000. At 2000, few of them would be willing to buy. Simple thing is if you like a stock at a price, you should like it more at a lower price. The business is debt-free. Chances of fraud are almost zero. A P/E of 25-30 should be a great entry point provided an investor is willing to hold for the long haul. Most people are focusing on returns for next 1 year. Current season is of HFCs, Auto etc. Cera has seen fall from 2900+ to 1700+ in a matter of 3-4 mnths. Symphony has seen it from 3200+ to 1700+. The volatility in these stocks is something most investors cannot be comfortable with. I am very sure most of the other companies trading at steep valuations will see a good fall. But that doesn’t really mean they are bad businesses. Nestle commands a high P/E inspite of modest growth due to predictability of earnings. Based on these I dont believe Hawkins would ever be available to a P/E of less than 30.
Basant Maheshwari must take the blame for inciting many poor or small investors to buy hawkins at 4500 levels he has now sold and shifted it to some other stock but what about those who went by his outlook article his tv interview his constant bullishness on his BC on buying hawkins ? I think God punished his cunningness or deviousness in shutting down his BC ..He was so arrogant that he was saying even on his last day that he was giving more than what he was getting ! But it is sad that he now tweets so callously and arrogantly as if he has no blame to take on some of us small persons buying hawkins ..and to think he suddenly went silent on hawkins by closing his service taking our money and leaving us in the lurch on his dud recommendation ? Hope God is watching
This happens when people invest on borrowed conviction. 99% of people do not even know the business of companies that they hold in their portfolio. It is easy to just run a screener, visit the website of a company, if not ready to read; at least flip through an annual report.
If all of the above is impossible grab a research report and look at key financials although the forward p/e given in most are overtly optimistic
Most often novices run around like headless chicken when their stocks take a steep fall. Always increase your holdings in stocks in a step by step manner and never burn through your cash in one go. You can never know when buying opportunities come. And they often present themselves from time to time
Sorry if it sounded preachy. I am a bad investor myself, but as I am jobless I always have time to run through tons of annual reports stored on my tablet. The only book on investing I have read from cover to cover is “The most important thing” by Howard Marks. I couldn’t find books by Peter Lynch in book stores I go to , otherwise I would have read him too
Has anybody attendend AGM ? as BM present in meeting? how was guidance by management ?
no basant maheshwari did not come as he is out of hawkins 100% then itself – i heard before selling he wished to have a word with the ceo for reassurance but ceo told him sell if you wish -Earlier dolly khanna was also similarly rebuffed by hawkins mgmt -Basant Maheshwari has lost his credibility now 100% since who will now believe him ? if his tall talk on hawkins was credible then he must at least now come on tv or twitter and share his views – he took our money and left us midway on hawkins cant forgive his arrogance
waiting for brahm vasudeva’s speech to be uploaded on the hawkins site. It must be up soon I think.