Consumption stocks will deliver multibagger gains
Sunil Singhania has made it quite clear on a number of earlier occasions that he is of the firm belief that consumption stocks is where investors should invest their money if they aspire to rake in multibagger gains.
“Consumption is a structural story. We have a young population and they have still not entered the consumption age. Consumption is a long-term trend in India,” he advised.
The reason for this prognosis is because 20% of the human beings born in the World after 1st January 2000 are Indians.
Once these youngsters reach maturity and start consuming, they will lay siege over all consumer items and send them surging upwards like rockets.
It is not surprising that Porinju Veliyath has the same opinion as that of Sunil Singhania with regard to consumption stocks.
“We are at $2,000 per capita income at this point against $1,200-1,300 a few years ago. This is a trigger point. If you compare, China is now $10,000 and once we go to some $2,500 or near $3,000 per capita, that is going to make a huge positive impact on the consumption story, especially discretionary consumption,” Porinju explained, citing impressive and irrefutable data.
“The India growth story is intact. Our organic growth, whatever happens on the political side, is going to continue. And this is very important. I think the per capita income and the roadmap for the next, two, three, four years’ will give you a lot of energy to pick stocks in the market,” he added.
CONSUMPTION, CONSUMPTION, CONSUMPTION!
– No Tax upto 5 Lk For Middle Class
– Farm Package for Farmers with Land <2 AcresMark Mobius Says
– Excellent Budget
– Positive for Consumption
– Can Boost GDP by 50 Bps #Budget2019 #ELECTIONBUDGET#FMCGIsLife @MarkMobiusReal https://t.co/PUBXUyuA5e— Mangalam Maloo (@blitzkreigm) February 1, 2019
Two high-quality consumption stocks added to portfolio
Sunil Singhania has been scouting Dalal Street over the past few weeks looking for high-quality consumption stocks to tuck into.
Stock Pick No. 1: Lux Industries
I reported a few days ago that Sunil Singhania has bought 300,000 shares of Lux Industries on 6th March 2019 at Rs. 1,228 each.
The investment is worth Rs. 36.84 crore.
I have already explained the nuts and bolts of Lux Industries.
It is a producer of inner wear for men and women and has blockbuster brands like “Lux Cozi“.
It is also endorsed by eminent celebrities like Amitabh Bachchan, Virat Kohli, Shah Rukh Khan, Sunny Deol etc.
According to informed sources, the inner wear market presently stands at Rs. 24,000 Crore and is expected to grow to a mammoth Rs. 47,000 Crore by 2020.
If so, we should not be surprised if Lux Industries becomes the “next Page Industries” and delivers fabulous 100-bagger returns to its lucky shareholders.
Stock Pick No. 2: Hindustan Sanitaryware alias HSIL
Sunil Singhania’s second stock pick is a small-cap company named Hindustan Sanitaryware alias HSIL.
As of 31st March 2019, his Abakkus Growth Fund – 1 holds 15,25,000 shares of HSIL.
The investment is worth Rs. 42 crore at the CMP of Rs. 274.
Porinju Veliyath strongly recommended HSIL
HSIL is very familiar to us because Porinju recommended it as far back as in August 2015 at the CNBC’s Investors’ Camp.
The logic was quite convincing:
“Hindustan Sanitaryware, though a leader in the country is not so dynamically managed.
They have their glass and containers division, which I believe is futuristic. Everybody says this company is demerging it and selling off.
When you travel abroad you can see so much of packaged, packed food and beverages, beer, but there are a lot of things in its infancy in this country.
Now there is over capacity, which is going to change and this company is best place to take advantage of that.”
Watch for HSIL@124, No.1 brand, available at Rs.800 Cr mkt Cap. expect to double in an year. Selling pressure to end soon.
— Porinju Veliyath (@porinju) December 24, 2012
Porinju velliyath of equity intelligence recommends Multi baggers at investor camp-TCI, tata global Bev,HSIL, Godrej properties and NIIT
— Sonia Shenoy (@_soniashenoy) August 22, 2015
Nifty7929
Godrej Ind 373, Jet 348, HSIL 288, IRB 189, Fed Bank 67, Godrej Prop 290, Wockhardt 693, Century 682, MCX 1219 – some solid biz..— Porinju Veliyath (@porinju) November 22, 2016
HSIL up 10% today at historic high; holding in PMS. Look at some of the mid-caps that are industry leaders in a country with 1300 mn people!
— Porinju Veliyath (@porinju) October 10, 2017
.@porinju STOCK RECOS
Hold HSIL in portfolio; see stock benefitting from GST
TCI, TCI Express posted huge gains for our portfolio investors— avanne dubash (@avannedubash) July 5, 2017
PORINJU VELIYATH TO ET NOW ET NOW EXCLUSIVE : Hold HSIL in portfolio; see stock benefitting from GST
— ET NOW (@ETNOWlive) July 5, 2017
@porinju says
HSIL still has a long way to go; expect to double in next 1-2 yrs
Continue to hold HSIL in portfolio
Infra is definitely a theme & story going forward
Future Consumer has been one of the multibaggers— avanne dubash (@avannedubash) November 16, 2017
Strong Q4FY19 results augers well
HSIL reported robust Q4FY19 results which implies that it is getting its act in order.
Sandeep Sikka, the boss man of HSIL, pointed out that investments made in the past have started yielding results.
He pointed out that the capacity utilisation in the glass segment was high at 88%.
He also guided that HSIL will see nearly 25% growth in sales and that EBITDA margins would be 15%.
#4QWithCNBCTV18 | HSIL reports a good set of numbers for the quarter-ended March pic.twitter.com/CIMIT0EXRk
— CNBC-TV18 (@CNBCTV18Live) May 3, 2019
Sandeep Sikka, HSIL: Investments Made In The Past Have Started Yielding Results
Capacity Utilisation In Glass Segment At 88%, Little Room For Hike In Capex
Expect Nearly 25% Growth In Sales, EBITDA By 15%@NivritaG @deepdbhandari #BTVIFreeToAir pic.twitter.com/7dbVZWnwn6
— BTVI Live (@BTVI) May 3, 2019
| HSIL LTD – KEY FUNDAMENTALS | |||
| PARAMETER | VALUES | ||
| MARKET CAP | (Rs CR) | 1,981 | |
| EPS – TTM | (Rs) | [*S] | 9.74 |
| P/E RATIO | (X) | [*S] | 28.13 |
| FACE VALUE | (Rs) | 2 | |
| LATEST DIVIDEND | (%) | 200.00 | |
| LATEST DIVIDEND DATE | 23 AUG 2018 | ||
| DIVIDEND YIELD | (%) | 1.10 | |
| BOOK VALUE / SHARE | (Rs) | [*S] | 209.49 |
| P/B RATIO | (Rs) | [*S] | 1.31 |
[*C] Consolidated [*S] Standalone
| HSIL LTD – FINANCIAL RESULTS | |||
| PARTICULARS (Rs CR) | MAR 2019 | MAR 2018 | % CHG |
| NET SALES | 808.87 | 660.82 | 22.4 |
| OTHER INCOME | 21.44 | 6.73 | 218.57 |
| TOTAL INCOME | 830.31 | 667.55 | 24.38 |
| TOTAL EXPENSES | 695.47 | 586.19 | 18.64 |
| OPERATING PROFIT | 134.84 | 81.36 | 65.73 |
| NET PROFIT | 38.19 | 23.91 | 59.72 |
| EQUITY CAPITAL | 14.46 | 14.46 | – |
“Pehle Sauchhalya Phir Devalaya” (first toilets and then temples)
When NAMO first came to power, he had coined the battle cry “Pehle Sauchhalya Phir Devalaya” (first toilets and then temples).
Unfortunately, the emphasis on sanitation has now been given the go-by.
However, when NAMO comes back into power for the second term, he can be expected to revive his past promises, which means that sanitation stocks like HSIL will come back into favour!
Problem with companies like HSIL is that they are basically into toilet accessories which have a limited ‘replacement’ potential in the sense that one does not change the toilets and accessories very often or as often as one would change tiles, etc which have more visual and perception appeal.
And that’s why HSIL has not grown at the same rate at which tiles and paints industry has grown. And therefore there is limitation to its growth potential.
Yes, you are right. same think sone I the result also
YOU ARE RIGHT. PORINJU HAS BOUGHT HSIL AT RS 300 FIVE YEARS BACK AND THE SAME IS BELOW PURCHASE PRICE TODAY.
If one want to benefit from housing sector, paint sector is best.You have New market as well as replacement market in every house after 5 years.
The current and immediate term problem with paint industry is rising crude which has upset the profit margin of all paint companies and that’s why the share prices of all the paint companies are also subdued.