DATE 26-11-17 — IVP price 197
It’s becoming increasingly difficult to spot multibaggers in an overheated market. As investment advisor, Kenneth Andrade says, it is best to buy companies now that are making good money in depressed market conditions.
IVP Ltd, which belongs to the Dubai-based Allana group, is one such company, and here is why I consider it a potential multibagger:
1. PROMOTER-MANAGEMENT PEDIGREE
The Allana group, founded since 1865, is a US $5 billion dollar group based out of Dubai. IVP Ltd India is professionally managed with experienced and competent people holding the reins (Vishal Pandit and Mandar Joshi).
Now,, being a $5 billion group can can also be a negative because when you have so much money, you really may not want more. However, the businesses of IVP are such that the company’s growth looks like it is set on auto pilot.
To know why, we need to understand their product profile.
Polyurethane systems (used in footwear)
Foundry materials (used in iron, steel alloys making, cores & moulds, ferrous and non ferrous castings, automotive castings, graphite coatings, magnesite and other foundry coatings)
Composite Resins — THIS IS THE FUTURE! — Performance plastics are set to replace conventional metals in aerospace, defence and automobile applications. You can either google this or click the link to know how performance plastics will dominate the future.
Insulation Resins – A global major that also makes insulation resins is ELANTAS. It is listed in India as Elantas Beck – go check its price.
Here’s an extract from the IVP AR’s management discussion, enough to make one bullish:
Okay, now we have great parentage, products with potential, and so it’s time to move on to finances.
3. IVP FUNDAMENTALS
The company has already booked expenditure for modernising its factories in Bangalore and Tarapur, and that hit been accounted for.
Equity – 10.32 crores of which 70% is held by the management
Reserves – 62.45 crores
Debt– 13.95 crores
BV – 70 PER SHARE!
EPS 10.84 in a year where its plants were being modernized.
The net fixed assets of the company have jumped from 19 crores in 2015-16 to 35.30 crores in 2016-17 – a clear indication of good times coming for customers and shareholders, and a bad time for the competitors. All investments were made from the accumulated cash reserves.
There’s one negative — the sales are 181 crores and the debtors stand at 61 crores, indicating a lengthy debtor cycle. But that is more or less balanced out by a 2.5-month creditor cycle.
Net cash generated from operations is about 4.93 crores in 2016-17.
The company has provided for bad debts of 2.75 crores in full, so there’s no future hit expected on their accounts.
The company also pays out dividend regularly (20% in 2016-17) and it is a matter of time before it is picked up by an aggressive mutual fund.
The most exciting thing about IVP Ltd is the disruptions that are about to hit the industry. The company seems primed for the future which is not what you can say about some of its competitors.
It looks like a fabulous medium-long term buy and as this article has been published on a Sunday, you have enough time to research and form an opinion.