Market News

5MAL!- CAPs

BUSINESS INDIA

September4,2011

portfolio, is lower at 5.3 Per cent.

Recrpe for
f
A Fhen

profit
investors' interest in the company is the performance. For the nine month period in FYll it has Posted a net profit of {14.07 crore, which is nearly 35 Per cent higher than the

The company, which is largelY into LPG stoves, mixer-grinders, wetgrinders, cookers and flask, has
a

pro-

Gandhimathi Apptiances is pursuing growth aggressively and planning a Pan-India Presence

moter holding of more than 62 Per cent of the relatively small capital
base of {9.63 crore.

V V shares rise bY nearlY five times in the sPan of less than a Year two

small-caP company's

It is true that the comPany is highly leveraged with its total borrowings at 777 crore being nearlY twice its net worth at {41 crore. In a

thoughts come to the minds of the

profitable market, interest rates tend io get absorbed and Profits swell

investors. The obvious one is that the prices are maniPulated bY some oPerator who has managed to acquire the shares earlY. The other is, it is probablY a turnaround and the mar-

kets missed the oPportunity. In the case of Gandhimathi APPI|

for the shareholders. The comPanY, which merged one of its sick subsidiary Gangadharam APPliance in FY10, has taken an unsecured loan of t20 crore from Religare Finvest to deleverage itself. The loan, payable over a period of 12 Years, was used to repay a loan taken from Dewan

ances, (market caP {373 crore) better known for its brand ButterflY, the second seems more likelY. The shares of the Chennai-based comPany, which was a Blf R case in earlY 2000, have enioYed a great run over the last four Years.
shares have been rising steadily' Till a year ago, ln August 2010 the shares were trading around T73. Since then

Housing Finance at a higher interest' It is also looking at raising funds to

From t10

in

August Z0O7

t}:Le

the prices have moved uP

reached

every month. In JulY 2011, the share Price

tr
;*g

further reduce its borrowing costs. Towards this end it has sought oermission from its shareholders to inctease its authorised capital from

{10 crore to t25 crore. Besides lower interest

':g---***-/
/..
tr*;1:

der rvorth t285

volume growth. in July it bagged an orcrore

charges Gandhimathi will benefit from assured

and is currentlY hovering around t310. The rise is remarkable at a time when the market is steadilY drifting downwards' ' One reason to have triggered

an all time high of t352

orofit earned in the 18 month Period on an annualised basis. In the first quarter of FYL2 growth in PAT (t33'4
crore) was nearlY 59 Per cent more' And it has outPaced the 50 Per cent growth in total income to {69 crore'

from the Tamil Nadu government to suppiy tabletop wet grinders and mixers in FY12. This could, if implemented ProPerlY, see the company reaching the {500 crore sales
turnover mark shortly. The company has alreadY undertaken a Proiect to expand its production facilities in Tamil Nadu. Additional storage space to store finished goods has also been constructed. While the comPanY enioys strong brand loyalty in the southern parts

Sweet sector Most of the comPanies in the aPPliTurnover

({

lakh)

30000

ances sector have also done well. ttr Prestige (market cap {3,500 crore) has seen its prices triple to13,447 from its 52-week low of under t900. Hawkins (market cap {900 crore) prices have doubled to t1,730 from a S2-week

1?qqg

low of t827. The net Profit margins have also improved to 6.3 per cent, while this is
by far the highest in the last five years, it is below the near 11 per cent margin of ttr Prestige and 9.4 per cent margin of Hawkins. The margins of Bajaj Electricals, which has a more diverse

99qq 0 Aug 2008

Aug 201 1.
*As

of the country, it is now looking at expanding its presence across India' A four year plan to increase its turnover and improve profitability is under implementation. Like in the case of all small comPanies, esPeciallY the ones which are highly leveraged, the risks are high. In the case of a downtutn, servicing debt could be a major issue' i DAK'E'H PARTKH

Source: BSE, month'end figures.

on 1 1 August'

;I2Ot