It was a great TAP GAP 6/11 Contest…and it was not really difficult to chose the Winner given my growing fondness for Agri Products and Commodities and Consumer Products
TAP GAP 6/11 Equity Poser was :
Which Industrialist or his or her Company will be a huge Wealth Creator in the next Five Years ?
AND THE WINNER IS PEJAVAR WHOSE RESPONSE AND REASONING FOR HIS CHOICE OF SHREE RENUKA SUGAR WAS QUITE CONVINCING….HE GETS THE GAURAVBLOG HAMPER…CONGRATS PEJAVAR
Mini gauravblog hampers are being awarded to SAMEER for TITAN INDUSTRIES as first Runners Up and to RANJIT and JIGS for COROMANDEL INTERNATIONAL as second Runners Up
Pejavar,Sameer,Ranjit and Jigs do convey to me your address and contact numbers at [email protected] and also indicate your Chest Size so you get the right sixe T Shirt
ALL MY WINNING SELECTIONS FROM THE RESPONSES REVEAL MY BIAS FOR AGRI AND CONSUMER PRODUCTS
Dhiren,I loved your response of Lovable Lingerie as a multibagger potential scrip…you would have clinched atleast a mini hamper had you taken the trouble to reason your choice…I’ve short listed it in my Top 5 responses….ofcourse you can argue that some who won also did not offer any big reasoning too…but in my view their choices were wee bit better in probability to become a 5X multibagger in the next 5 years
And for all those who responded with their choices,don’t lose heart….this is what I promise….at any time if the 5X Target Price for your Multibagger Selection Choice is reached within 5 years,please do remind me and boast it out loud to me “I told you so !”….and I shall reward you well….Don’t worry I’ll be around !
Swaroop & Ekansh,your choices of Zydus Wellness and Cera Sanitaryware look promising….Zydus has indeed scaled up fast but will face some tough competition in scaling up more and Cera will have to face challenges in the next few years of rising Interest rates and continuing Real Estate woes impacting business
Kiran,the Pharma sector is already facing huge challenges and Indian majors are selling out businesses…I’m not confident Aurobindo and Ishita can achieve non linear earnings in the coming few years
RR,Biocon has not really made money for shareholders all these years though it held out great promise…now it seems it is ready to take off….need to be more convinced it will though
Suresh,my dad was one of the first to join Indian Oil in it’s infancy in the 1960s and remained loyal to it till he retired in the late 1980s…However IndianOil is bleeding under subsidy burden and other issues too
I have serious Corporate Governance issues with Adanis,Ambanis,Jagtrambas,Indiabulls,Jaidev Modi and Gaurs…and to an extent with Piramals….also linking profits with political patronage is not a sustainable model
Ranjit,there is no doubt that the Education Sector will continue booming….look out for new entrants and dynamic entrepreneurs in this field
Nitin,Cerebra Promoters have been around twenty years with little to show for it…I doubt their ability to scale up an opportunity like e-waste successfully….although TCI Developers and Kesar Terminals do look interesting to study yet further
In my view the Expectations and Potential of Eclerx,Opto Circuits,Geodesic,Larsen and ICICI Bank has been captured to some extent in their share price….so the upside may not be 5X in the next 5 years….Yes Bank ,though, is positioned to move up on continuing aggressive growth…I’ve shortlisted it in my Top 5 from the responses
Shahzad,I love the Tata Group…your choice of Tata Global Beverages is a good one….keep monitoring it….They will need to surge Consolidated EPS levels from just under Rs 4 to Rs 20 to get a 5 X Price of near Rs 500 on the Bourses in the next 5 years…their tie ups with Pepsico and Kerala Ayurvedic and their acquisitions overseas is driving the business…Earnings though have been impacted by Fx movements in recent years and the exceptional earnings from the sale of Rallis is now behind them
Anand Mahindra Group faces uphill struggle with their Auto and Tech Forays
The Godrej Group are positioning themselves well to capture scale opportunities…a lot is already factored into their listed shares
No responses came in for the Future Group….So,no one seems to have any fondness for Kishor Biyani and his Future Group after the Price decimation of Future Capital Holdings from the Jan 2008 IPO Pricing of Rs 765 to the current @ Rs 140….He has come out with a par Rs 10 IPO of Future Ventures recently….if he strikes big with Investments being made in it,expect Future Ventures ,available at below par today to surprise on the up side….don’t write him off…yet !
I have assessed all your Choices on four Basic Criteria as below with several sub criteria within these…and graded each Criteria on 5 in the table below…please do forgive me if our views don’t agree on these….all I can say is that if you do have strong conviction on your choice,you must take the risk to be invested in it with appropriate weightage and exposure to make a difference to your Equity Wealth
The Four Basic Criteria are :
-
MANAGEMENT….Promoter Pedigree,Proven Domain Skills,Corporate Governance,Vision,Risk Taking Ability,Fund Raising Ability,Quality of Human Resources and Top Management Team driving the business
-
BUSINESS MODEL….Scalable Opportunity,Intention and Ability to back,Barriers of Entry,Demand & Supply Equation,Potential of Non Linear Growth
-
FINANCIALS….Current Scale of Operations,Accounting Ratios,Targeted Growth Potential
-
VALUATION….Value vs Price,Relative and Absolute Valuations,Market Dynamics
|
Sr |
Company |
Choice of |
Price Now in Rs |
5X Pricein Rs in 5 years |
5X Price Probability @ 40% CAGR |
Management |
Business Model |
Financials |
Valuation |
|
1 |
Adani Enter |
Sameer & BS Reddy & Ravi Kanth |
661 |
3305 |
2.5 |
2.5 |
2.5 |
2.5 |
|
|
2 |
Adani Power |
BS Reddy & Ravi Kanth |
107 |
535 |
2.5 |
3 |
3 |
3 |
|
|
3 |
Aurobindo Phar |
Kiran |
171 |
855 |
3 |
3 |
3 |
3 |
|
|
4 |
Biocon |
RR |
342 |
1710 |
3 |
3 |
3 |
3 |
|
|
5 |
Cera Sanitary |
Ekansh |
198 |
990 |
3 |
3 |
3 |
3 |
|
|
6 |
Cerebra Integ |
Nitin |
35 |
175 |
2 |
2 |
2 |
2 |
|
|
7 |
Coromandel Intl |
Ranjit & Jigs |
335 |
1675 |
High |
4 |
4 |
4 |
4 |
|
8 |
Delta Corp |
Sameer |
87 |
435 |
2 |
2 |
2 |
2 |
|
|
9 |
Eclerx Serv |
Sameer |
789 |
3945 |
3 |
3 |
3 |
3 |
|
|
10 |
Geodesic |
RR |
68 |
340 |
3 |
3 |
3 |
3 |
|
|
11 |
Godrej Cons |
Sameer |
421 |
2105 |
3 |
3 |
3 |
3 |
|
|
12 |
Godrej Inds |
Sameer |
197 |
985 |
3 |
3 |
3 |
3 |
|
|
13 |
Godrej Prop |
Sameer |
666 |
3330 |
3 |
3 |
3 |
3 |
|
|
14 |
Gujarat NRE Coke |
Raoji |
44 |
220 |
2 |
2.5 |
2.5 |
2.5 |
|
|
15 |
Indiabulls Fin |
Sachin |
146 |
730 |
2 |
2.5 |
2.5 |
2.5 |
|
|
16 |
Indian Oil Corp |
Suresh |
322 |
1610 |
3 |
3 |
3 |
3 |
|
|
17 |
Indiabulls Real Est |
Ramesh |
107 |
535 |
2 |
2.5 |
2.5 |
2.5 |
|
|
18 |
ICICI Bank |
PVR |
1014 |
5070 |
2.5 |
2.5 |
2.5 |
2.5 |
|
|
19 |
Ishita Drugs |
Kiran |
30 |
150 |
2.5 |
2.5 |
2.5 |
2.5 |
|
|
20 |
Jaiprakash Asso |
Amit Gupta |
76 |
380 |
2 |
2.5 |
2.5 |
2.5 |
|
|
21 |
JSW Steel |
Amit |
848 |
4240 |
3 |
3 |
3 |
3 |
|
|
22 |
Kesar Terminals |
Nitin |
75 |
375 |
2 |
2.5 |
2.5 |
2.5 |
|
|
23 |
Lovable Lingerie |
Dhiren |
394 |
1970 |
High |
3 |
3 |
3 |
3 |
|
24 |
L&T |
Ravi Kanth |
1646 |
8230 |
4 |
4 |
4 |
4 |
|
|
25 |
Mahindra & Mahindra |
Amit Gupta |
634 |
3170 |
3 |
3 |
3 |
3 |
|
|
26 |
Mundra Port |
Sameer & BS Reddy & Ravi Kanth |
148 |
740 |
2.5 |
2.5 |
2.5 |
2.5 |
|
|
27 |
Opto Circuits |
Ravi Kanth |
272 |
1360 |
3 |
3 |
3 |
3 |
|
|
28 |
Piramal Health |
Anand & Ramesh |
364 |
1820 |
2.5 |
2.5 |
3 |
3 |
|
|
29 |
RBN |
Nitin |
77 |
385 |
2.5 |
2.5 |
2.5 |
2.5 |
|
|
30 |
Reliance Comm |
Praveen |
88 |
440 |
2.5 |
2.5 |
2.5 |
2.5 |
|
|
31 |
Riddhi Siddhi |
Rajan |
312 |
1560 |
2.5 |
2.5 |
2.5 |
2.5 |
|
|
32 |
Reliance Industries |
BS Reddy |
849 |
4245 |
2.5 |
2.5 |
2.5 |
2.5 |
|
|
33 |
Shree Renuka Sugar |
Pejavar |
58 |
290 |
High |
3 |
4 |
3 |
4 |
|
34 |
SRF |
Kumar |
283 |
1415 |
3 |
3 |
3 |
3 |
|
|
35 |
Tata Elxsi |
Nitin |
234 |
1170 |
3 |
3 |
3 |
3 |
|
|
36 |
Tata Global Bev |
Shahzad |
92 |
460 |
3 |
3 |
3 |
3 |
|
|
37 |
TCI Developers |
Nitin |
196 |
980 |
2.5 |
2.5 |
2.5 |
2.5 |
|
|
38 |
Titan Inds |
Sameer |
4573* |
1145 |
High |
4 |
4 |
4 |
3 |
|
39 |
Yes Bank |
Sameer |
287 |
1435 |
High |
3 |
3 |
3 |
3 |
|
40 |
Zydus Wellness |
Swaroop |
591 |
2955 |
3 |
3 |
3 |
3 |
|
| *CB 1:1,Split 10:1 |
Brief reasons why I liked Shree Renuka Sugars from the responses that came in…..
Assess to gain perspective through the same basic criteria adopted above…Management…Business Model….Financials…Valuations
I think Shree Renuka Sugars is positioned very well to reap significant benefit going forward the next five years…it has been beaten down the last year to a 52 week low from a 52 week high of Rs 108,so the base under Rs 60 is low…it becomes even more attractive if it drops towards Rs 40….FV is Rs 1
….it’s two acquisitions in 2010 in Brazil,the largest and lowest cost producer, are adding to capacities by 13.6 million tonnes cane crushing per annum through four factories and will favourably impact operations and margins as crushing seasons do not overlap….Shows foresight and vision and risk taking ability to grow of the proven promoter Murkumbi and makes Shree Renuka Sugars Group as one of the largest sugar companies globally
….Commodity stocks have always performed well in cyclical periods…but going forward and visualising the Market Dynamics and the Demand & Supply Equation, I see Shree Renuka Sugars regaining PAT of Rs 700 crs inside two years,with turnover crossing Rs 10000 crs and EPS back to Rs 10 levels….moving on from here we should see Profits doubling in the next four to five years and with it the EPS…A 10-15 Multiple for such potential growth is warranted and this gives a target range of Rs 200 to Rs 300 in 4 to 5 years time…Ethanol Potential too will be tapped well
….The Company has been quite investor friendly too….Last year dividend was 100% for September Year ending FY 10 and a 1:1 Bonus,approved earlier was allotted in March 2010…..The Company also holds a 12.5% stake in NCDEX
….ofcourse risks exist…Servicing Debt,the fluctuating Price of Sugar,vagaries of weather,government controls,promoter Murkumbi pledged shares,tackling Operational issues in new country,Brazil …but with finite land production and no significant jump in productivity continuing to feed an infinite growing world population…currently approaching
7 billion,is there any doubt that agriculture commodities will rise sharply in the next five years and more….Sugar is one of these and India is the largest consumer….Ofcourse what will benefit too are agricultural related companies…Fertilisers,Crop Chemicals,Irrigation
19 thoughts on “The Winner of the Multibagger Potential Choice for TAP GAP 6/11 is Shree Renuka Sugar…Congrats Pejavar !….Runners Up are Sameer for Titan and Ranjit and Jigs for Coromandel International…Congrats”
Hi Gaurav,
It would be good, if you can provide some reasoning (your perspective) behind the first pick Renuka Sugars.
I am desperately looking for agri products since I heard Jim Rogers two years before. But Sugar is cyclic business. Does Coromandl, Rallis, Jain irrigation nor scores over Renuka sugar?
Gaurav,
Delta is on your recom list and u are negative about jaydev modi. Should I hold it or sell it ???
Dear Ramesh,
Delta is a huge aggressive play…and I continue to observe that there are price manipulations accompanied by media hype at regular intervals….insiders are always in the money…outsiders always lose in the play….it is not on my recommendation list at all…just blogged on it when it was in that super fast trajectory mode enroute to Rs 140…sorry if it mislead into going long….the retraction too was quite rapid….not a share for all….even though experts will state that Gambling and Hospitality is a huge opportunity…Goa has recently clamped down on the former….if you wish to hold it,it must be within what your risk profile…and that is aggressive…also don’t overexpose weightage unless you are convinced like Sameer is that it is a multibagger in the making…Cheers…sorry I will not venture into it…even for some short term gambling fun,I would be wary now…Cheers
Congratulations to the winners!
I think this was the TAP GAP with the best & widest participation & threw up numeoros possible multi-baggers.
My 2 cents:
Although everybody & his uncle are super-bullish on Agri commodity plays i’m rather sceptical.
I still remember (from dad & from Historical records/books) that most ‘celebrated’ ‘Malthusian’ economists had predicted MASSIVE food shortages, economic slump,riots,etc in the 60’s on the premise of India & China’s rapid population growth & increased demand for food in the 70’s.
Alas, this never fructified as we had our Green revolution & China too managed to increase food production & control population growth.
Yet again we hear ppl. screaming that the sky is falling!
What goes unnoticed is the vast tracts of land bought by China & other wealthy Arab kingdoms in Africa were they plan to cultivate on a large scale with better productivity per Hectare.
To put things in context China has cereal yield per hectare of around 5 tons per Ha & India has around 2.5ha!!! So despite having smaller arable land than India china has double the productivity to feed its people!
Just imagine if they are able to replicate the same in Africa’s vast tracts of land with cheap labour & IF India could get somewhere close to China’s productivity levels(double the current food production!!).
With World population growing at around 1.2% per year i dont forsee any major shortages although there could be temporary spikes due to climate events.
Besides Agro commodities have ZERO pricing power as we saw with the Sugar cycle in 2010 (the so called upturn lasted less than 6 months!!).
Havig said that Agri suppliers(Micro-irrigation, Tractor makers, fertilizer suppliers,etc) should do very well.
Coromandel & Rallis do like promising plays but the main issue with this sector is Govt. regulations & the fragmented nature of land holdings in India.
In conclusion: I will stick to my favourite commodity for the next many years …..:GOLD!!
Cheers!
Dear Gaurav,
Thanks for clarification! Maybe I think its time to scale down my holdings in Delta. Never thought of India’s second biggest legan consultant zia mody … Samir Arora is right.
Dear Raja,
This a brief reason why I liked Shree Renuka Sugars from the responses that came in…..I think Shree Renuka Sugars is positioned very well to reap signficant benefit going forward the next five years…it has been beaten down the last year to a 52 week low from a 52 week high of Rs 108,so the base under Rs 60 is low…it becomes even more attractive if it drops towards Rs 40….FV is Rs 1….it’s two acquisitions in 2010 in Brazil,the largest and lowest cost producer, are adding to capacities by 13.6 million tonnes cane crushing per annum through four factories and will favourably impact operations and margins as crushing seasons do not overlap….Shows foresight and vision and risk taking ability to grow of the proven promoter Murkumbi and makes Shree Renuka Sugars Group as one of the largest sugar companies globally….Commodity stocks have always performed well in cyclical periods…but going forward and visualising the market Dynamics and the Demand & Supply Equation,I see Shree Renuka Sugars regaining PAT of Rs 700 crs inside two years,with turnover crossing Rs 10000 crs and EPS back to Rs 10 levels….moving on from here we should see Profits doubling in the next four to five years and with it the EPS…A 10-15 Multiple for such potential growth is warranted and this gives a target range of Rs 200 to Rs 300 in 4 to 5 years time…Ethanol Potential too will be tapped well….The Company has been quite investor friendly too….Last year dividend was 100% for September Year ending FY 10 and a 1:1 Bonus,approved earlier was allotted in March 2010…..The Company also holds a 12.5% stake in NCDEX….ofcourse risks exist…Servicing Debt,the fluctuating Price of Sugar,vagaries of weather,government controls,promoter Murkumbi pledged shares,tackling Operational issues in new country,Brazil …but with finite land production and no significant jump in productivity continuing to feed an infinite growing world population…currently approaching 7 billion,is there any doubt that agriculture commodities will rise sharply in the next five years and more….Sugar is one of these and India is the largest consumer….Ofcourse what will benefit too are agricultural related companies…Fertilisers,Crop Chemicals,Irrigation…..It’s a Long Term Theme Play going forward…my downside long term risk is probably Rs 20 from the CMP of Rs 57/58…and the upside potential is over Rs 200 in the next 5 years….worth including it in your Equity Portfolio ,but with a long term view…however I sense it will move back towards Rs 100 in a year or so….Cheers
Dear Sir,
I have seen the list of stocks that are projected to be multi-baggers in the next five years. One stock that caught my attention is Lovable Lingerie , which has had a decent run from its issue price of Rs 200+ to a high of Rs 463. Looking at the stock in comparison with Page industries which is in the similar line of business albeit a bigger brand name Jockey, doesnt it make sense to invest in this scrip. Maybe we are looking at a multibagger of the future. Your kind views.
Yes Rohit,I agreed with even Dhiren who had responsded this Lovely Choice of Lovable Lingerie…it made my Top 5 list from the responses….you see I Love my Wife and my Wife Loves Lovable Lingerie..so it follows logically that I too love Lovable Lingerie…and there is no logical fallacy here !
I was impressed when I went through the Prospectus of Lovable Lingerie….it is logical to compare it with Page Industries…however what comparison actually struck me first is Jubilant Foodworks (Dominoes) and the superlative returns from IPO…Lovable Lingerie looks like a mini Dominoes….also my wife is always credited with making Quality Choices…our Marriage is a firm example….read up on Peter Lynch’s research approach…once even he had to make an assessment on whether to retain his exposure in a leading Lingerie Company when a new competitor had hit the street….can you guess what he did to decide !?…will let you know if you don’t guess it right !…cheers !
Dear Sir,
Thank you for your reply laced with humour but which is a reality la Warren Buffet way of thinking. We have to just look around us to gauge the popularity of product and the brand. As far as guessing what was the approach of Peter Lynch was it something similar to what I have mentioned above. Waiting to know from you.
Thanks Gaurav Sir,
Email from you just boost my confidence .
I would like to give my hamper to shahzad. After reading his post and your post on Tata Global I did research my way. I found it very very interesting and great long term bet(I was fool to think it as just Tea Company). As you can see in my previous posts, Titan was never my first choice but my first choice is ONLY&ONLY Godrej Indusries. And Hence I would like Tata global to win over Titan Industries(Although wrt my personal opinion Godrej scores over Tata global)
My sincere apology to you for not accepting gifthamper but frankly I am kid in market and there is long way to learn from your blog.Its upto you to take decision on whom to give gift hamper.
Yes,Rohit ,when you state to gauge the popularity of product and brand you are on track as to what Peter Lynch did to assess his holding in a leading lingerie company when a new competitor came along….question is how did he do this….well,he actually purchased different sizes in different lingerie apparels of the competitor and told his secretary to distribute these to the ladies in Fidelity and ask them to report on how good they felt the product was after using it….they came back complaining of the quality….Peter Lynch then rested easy and retained his exposure of the leading Lingerie Company !….the responses I get at my workshops range from that he would have sold all or part of his holdings or bought a stake in the competitor to the extreme of buying out the competitor !…..why get scared of competition !…first assess it !….”Aa dekhe zara tuj main kitna hai dum !” ….Cheers !
Dear Sameer,
Your gesture to suggest Shahzad for the hamper instead of you for his choice of Tata Global is truly warming,humble and magnanimous….I shall however retain you,the ‘kid’,as the first runners up…am sure Shahzad will win a hamper down the road….his choice was good but missed making my Top 5 from the responses…you see Sameer,like you ,others too who responded with their choices will have their preferences and views too on which choices are deserving winners…..perhaps I should award hampers to all !!!…all were truly spirited choices,though some were not within my perspective of ‘Ethical Wealth’ Potential…..so Sameer,do email me your contact address and chest size…and thanks for responding to this TAP GAP Poser and appreciating the blog…..Incidentally your choice of Titan is now ex bonus and ex split Rs 230….and should move up strongly in the next 5 years…..though one influential, and in my view, deliberately manipulative,FII has called a ‘Sell’ on it….Cheers !
Yes, CLSA has sell on Titan & TCS (hmmm do they have anything against stocks starting with the letter T?)
TCS came out aggressively slamming CLSA’s report & guiding for good growth.
Titan hasn’t even bothered with a response
Maybe CLSA wants to pick up these at lower levels & then magically within a month or two, we’d have STRONG BUY reports suggesting ‘turn-around’ & maybe then we should consider selling!! 😉
Personally i don’t have stake in either of these companies as i rarely invest in Large-cap/’discovered’ stocks (thats the job of my Mutual funds managers!!) I did try scouting around for a Lifestyle/jewellery play which could be the next Titan but not a single one (Gitanjali, Rajesh exports, Shrenuj,etc) could match up on Titan’s Corp. Gov. record so i’m still on the look out!
Cheers
Hi Gaurav,
Thanks for the detailed analysis.Need your inputs on the following:
1) What according to you would be the high probable multibaggers which are not in the list here.
2) What are your thoughts on Numeric Power and SesaGoa both have EPS around 40 and P/E of around 7.
Thanks
Nitin
Hello Sir,
Good time to buy Shree Renuka Sugars after ydays deep cut ?
its down to 34..multibagger has turned multishreder
Hi Amit…a fall like this from Rs 50+ levels towards Rs 30 does look scary and I can quite understand the ‘multishredder’ sentiment….but this is not a quick play… do give it time….. the reasons I like Shree Renuka Sugar have been summarised by me on the blog itself….I have clearly stated it’s a five year play with risks like servicing high debt and with a max downside to Rs 20….the last quarter performance has thrown up the risks of high debt and forex loss and underperformance in Brazil…they will manage to crush cane of just 8.5 m tonnes instead of the envisaged 10 m+ tonnes…Debt has to be reduced in 2012…
Yes Anand,I would be keenly watching this fall for an attractive entry level for a long term position…but I must confess I’m a bit peeved with the Promoter Murkumbi…a few months ago he was quite ecstatic about Brazil…clearly he was not so forthcoming on the risks of high debt and fx loss and probable underperformance in Brazil….yesterday he appears on TV and blames these risks playing up for the quarter underperformance…methinks he was clearly aware that the quarter may not pan out well….he should have been less ecstatic…it was clearly misleading…The Sugar Industry is going to face a challenging 2012 and this High Debt with Fx exposure and the underperforming Brazilian operations, on which a lot hinges,is going to cause many sleepless nights for Murkumbi…he simply has to reduce Debt in 2012 funded by Fresh Equity or part Asset sell off as any significant Profitablity remains a question mark
Dear Sir,
I spoke to a Gentleman who worked until recently in a seniorSugar Industry person position in a sugar company in South India and he mentioned that