Hatsun Agro – high Ebitda and RoE, strong brands and rapid expansion:
After the recent budget, a lot of focus is on the rural economy and farmers. I think this segment should come into focus. For Hatsun Agro, 90 per cent of the business is coming from milk and milk related products and 10 per cent from the ice cream segment. The brands of Hatsun are quite well known in south India and also their ice-creams brand Arun is well known in Tamil Nadu. The company has been operating at extremely healthy EBITDA margins and returns on equity has been growing strong. Moreover, the company is increasing its penetration from 4,500 centres to 8,500 and also penetration of villages from 8,000 to 10,000. So all in all, the company is making a strong name in the dairy products and the company is in limelight in this segment.
Hawkins Cookers – High Ebitda margins, RoE of 60%, debt-free, strong brand and potential beneficiary of 7th Pay Commission:
The second one is Hawkins Cookers and it has been a huge wealth creator and a multi-bagger throughout. The recent correction is giving more opportunity for people who had left it, to enter the company again. So it is a household brand and well known in the cookware segment. The company has been maintaining extremely healthy EBITDA margins and returns on equity are all the way up to about 60 per cent or so. Moreover, the company has a strong balance sheet with zero debt and the company is also spending quite a bit on the R&D which should be helping the overall product innovation. When the Seventh Pay Commission recommendations get implemented, consumption scene will open up further and some of these brands should be beneficiaries. And Hawkins we are recommending with a price target of Rs 3100.of late. It is a good thing to bank upon. The dip should be used to accumulate the stock.
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