Whistling since 51 Years : Hawkins Cooker

Dec. 12, 2010 - PRLog -- 51 year old company is the leader in the pressure cooker market in India. The company is none other than Hawkins Cookers Ltd. Today, it has 2 offices, 3 factories and about 1000 persons working. It exports its products since 1974. Hawkins has sold over 42 million pressure cookers worldwide. Today, it makes 57 different models of pressure cookers in 10 different types. Company believes in continual Product innovation and Quality Check.

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Company got the 3rd Rank in 100 fastest growing small companies by ET Intelligence Group in the year 2010. Why it got the 3rd rank? Why it is one of the fastest growing companies? Why it is surviving since 5 long decades? So, Let us find out WHY???

There is not much to say about the sector in which Hawkins is operating. The Company has built a brand in the consumer durables segment. Company is doing well with its existing factories and it is penetrating in six different continents. Company is marketing its product in various ways like T.V. Commercials, Print Media, House-wives loved Magazines like Grihshobha, Saheli etc. It’s marketing strategy is really good and targeting the perfect audience.

Financial Health:

Company is doing well with its OPM & NPM. If we compare with industry average than its Margins are more than double. Company’s assets are being utilized in a very effective manner. ROA is almost 71% in the current fiscal, it means that the management has a very good understanding about the right choice of assets which can generate profit. Compared to industry average the company is almost generating 4 times better returns on its assets & 5 times on its equity. The company is having ample of revenue generation, and margins are on the higher side which helps to give an Interest Coverage Ratio of around 33.68.

Debtors are well managed and the company takes only one month to convert its debtors into cash. 5yr CAGR for sales is around 20%, whereas the company is having a 73% CAGR for PAT for the last 5yr. Company is having a liability of around 12cr and the cash balance with the company is around 39 cr. This suggests that the company can any time pay its liabilities and further for small expansions and all it doesn’t require funding. It is sitting with a good amount of cash.

In Q1FY11, company has posted a decrease in its revenue compared to its immediately preceding Quarter but the company has successfully increased its NPM. Compared to the same quarter of FY10, company has increased its revenue in the Jun’10 by almost 15%.

Valuations:

Compared to industry average the company is doing far better with its margins but the P/E which it is commanding right now is almost 65% of its industry P/E. This gives me a bullish picture that the company is still having an upside to cover for its right valuation. Fundamentally the company has no issues, the company is paying regular dividend and 400% is the declared dividend for FY10 which is the highest dividend till now by the company.

Management is holding almost 56+ percent stake in the company and almost 30% of the stake is in strong hands. So I can conservatively say that the company’s 75% of total shares are almost not trading. Company’s management is very experienced and well educated to understand the norms and compliance part.

CMP is Rs.1060. Currently it is trading at a P/E of 14.96 and the EPS is around 71.51. Considering the growing consumerism in India and the fact that the company commands a leadership position, one should hold the stock for longer tenure of 2-3 years and reap good returns on their investment.
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