Prerna Jhunjhunwala, Daljeet Kohli’s trusted aide, has been associated in the HSIL recommendation from the very beginning. She has kept a hawk eye on the stock and painstakingly sifted through reams of data to analyze all of HSIL’s strengths and weaknesses.
Think, Act, and Invest like Warren Buffet
Together, Daljeet and Prerna have hand-held investors and guided them to fabulous profits by periodically sending encouraging updates on why they ought to buy the stock.
You can see the systematic manner in which Daljeet and Prerna have worked on the stock. They first quietly put HSIL in the Model Portfolio on 16th April when it was at Rs. 136. Then, on 23rd May 2014, when the price had surged to Rs. 215, they felt more confident about the stock and issued a formal “initiating coverage” report with a price target of Rs. 278. Later, when HSIL reported robust FY14 results, the duo reiterated a buy and increased the target price to Rs. 330.
Now that HSIL has effortlessly crossed the target price of Rs. 330, investors are anxiously looking to Daljeet and Prerna for guidance about what they should do with the stock.
Fortunately, Prerna Jhunjhunwala has rushed out an update in which she has succinctly advised us about what we should do with HSIL. Let’s listen in:
“At CMP of Rs 333, the stock trades at 20.3x and 13.1x its FY15E and FY16E earnings of Rs 16.4 and Rs 25.5 per share respectively. Despite the sharp run-up in share price post Q1FY15 results, the valuation appears attractive. Its key competitor Cera Sanitaryware Ltd trades at PE of 26.3x its FY16E Bloomberg consensus earnings estimate. We value HSIL on SOTP basis. We revise our FY16E target EV/EBITDA multiple for building products segment to 10x from 8x earlier (Cera trades at EV/ EBITDA multiple of 11.7x FY16E Bloomberg consensus) and maintain 3x target EV/ EBITDA multiple for packaging products segment. Accordingly we arrive at target price of Rs 425 on the stock. We maintain our BUY rating.”
So, there you have it. Clear and confident advice, with no room for ambiguity. Prerna’s target price is about 20%+ from the CMP of Rs. 352.
Incidentally, Mehta Equities have also issued a report on HSIL advising a buy. They have projected a target price of Rs. 600, which is a long way from the CMP.
If you don’t have a SIP in HSIL already running, you ought to seriously consider it. My next update will be when the stock touches Rs. 425. How long will it take to get there?
I bought 500 HSIL at 363/- after reading this report and I am really scared now, there are hardly any volumes in this counter, It has fallen to 330 today and given that the market is in correcting mode, will go down further. Planning to hold it till the next quarter results. Though I am not too concerned abt the fall of 5%, I will have to book huge loss if this continues. How Daljeet and Prerana look again to their reports and provide revised estimation?
Any pointers from any other readers will be helpful and appreciated.
Thanks.
Meera, HSIL is a great buy, and if I were in your position, I’ll buy more at every decline, finances permitting. Do not let market fluctuations worry you from a great long term story.
Heart felt thanks Abhi for the response, I seem to have purchased it at its peak. I was in tears when I saw that there were no takers in NSE even after 15 mins of market open today, BSE had 21 shares as volume. Such an illiquid stock? Punters fav? Compared to CERA the visibility seems less, CERA its major competitor has bought out 21 colors of sanitary ware while HSIL is only Ivory/white. CERA has a celebrity endorsement to gain more exposure and thus sales, HSIL seems plain jane and unconcerned about any of these. I really do hope they pull the socks else CERA will eat into their market share easily…
Thanks for reading out my ranting:), I cannot average as funds are tight. Happy to know that I there is some one out there who believes in the HSIL story. Now it will be two.
As for the close today, its Green:)) Did the market read your response. Amen:)
When time permits,c
– Can you kindly share your thoughts as to why the volumes are so low in this counter? I see the volume history and it is not so impressive. Only when recommendations come here at the website is when I have seen the spike in volumes, else it is dud.
– Is it good to stay invested in a 2-3 years horizon?
Will not trouble you any other time.
Appreciate your response.
Meera, the stock price has come down with low volume means people are not parting with it at these prices, indicating strength of the stock. Compare this to other stocks like say, Jindal Steel and Power and Suzlon that crashed with huge volumes, indicating people getting out in panic.
Re. Cera, HSIL is way older, and commands customer loyalty as well. Besides, Cera only caters to the upper middle class onwards. India has the fastest growing middle class in the world, and Hindware has a strong brand recall, besides a very durable and long lasting product range. I think it also has a range for the upper middle class onwards, though it is not aggressively marketed yet.
At present the market is witnessing some profit booking, and quite a few future multibaggers are available at mouth-watering prices. Don’t be bothered by it, things will be different a month from now.
Thanks a lot Abhi. I really appreciate your inputs and your time. God bless:)