Multibagger Stock

AMBITION MICA LTD - Equity Research Report
DATE: 17/05/2017
  • COMPANY NAME: AMBITION MICA LTD
  • BSE CODE: 539223
  • SECTOR: Plywood- Laminates
  • BUY: 50
  • TARGET: 200
  • MARKET CAPITAL: 59.26 Cr.
  • FACE VALUE: 10
  • 52 WEEK HIGH/LOW: 23/80
  • BOOK VALUE: 10.54
  • SHARE PLEDGE : Nil
  • CURRENT PRICE/EARNING (TTM):26.91
  • DESCRIPTION:

     

    Recommendation - Buy

    Hold for 3 years

    Target: 200 Rs.

     

     

    Company Profile: Ambition Mica was incorporated in 2010. Company IPO came on June 2015 and w.e.f 14 July 2015 Company listed in BSE SME segment in M group. Ambition Mica Ltd is one of the leading manufacturers of mid segment decorative laminates and door skins. They market laminates under brands like Antique, Art Lam, Antique Aurum, Antique Colourcore and Antique Natural Wood. They also market door skin under brand name Beautique, Texas, Micro Touch, Antique Natural Wood and Door Touch.

    They are specialize in textured laminated and company has diverse range with 1152 designs in laminates and 429 designs in door skins that meets customer fancy.

     

    Company at Glance:

    • 1st April 2011, plant started with production of 1mm laminate sheet and door skin
    • 7th May 2011, company got Quality Management System Certificate and become ISO 9001:2008 Certified Company
    • 13th January 2012, Bureau of Indian Standard granted ISI certificate to company for unbeatable quality product.
    • 1st October 2012, company started another hydraulic press to increase production capacity 80,000 sheets/month to 1,50,000 sheets/month
    • 1st November 2013, company became first laminate penal corporation in India who launch their product in Android and I-Phone via Mobile apps
    • 15th December 2013, company started 3rd hydraulic press to increase production capacity up to 2,20,000 sheets/month.

    Brand: Company markets laminates products under the brand name of:

    • Antique
    • Art Lam
    • Antique Aurum
    • Antique Colourcore
    • Antique Natural Wood

     

    Distribution Network: Company has strong dealership in Gujarat and other states.

    Company have Antique brand dealers in  - Ahmedabad,Mahesana,Rajkot,Vadodara,Himmatnagar,Surat,Banglore,Udaipur,Jaipur,Hydrabad,Aurangabad,Hariyana,Raipir,Kanpur,Punjab,Mumbai,Kanpur.

     

     

    Company have Art Lam brand dealers in  - Ahmedabad,Rajkot,Pune,Mahesana,Vadodara,Surat,Banglore,Indore,Nagpur,Delhi,Hydrabad,Aurangabad.

     

     

    Export: Company has started exporting in the Middle East country (Saudi, Oman, and Bahrain) which will boost the company profit.

    Products:

    1 mm Laminate

    • Antique (24C)
    • Anique Aurum
    • Art Lam
    • Colourcore
    • Natural Wood

    0.8 mm Laminate

    • Lam Art

     

     

    Part – 2 Promoters Holdings

    Share holding pattern as on 31st March 2016

     

    % Share Holding

    Promoters Holding

    72.97

    Others Public Holding

    27.03

    Total

    100

     

     

    Part – 3 Key Financial Figures

     

    Ambition Mica

    Particulars (in Rs. Cr)

    Mar-16

    Mar-15

    Mar-14

    Mar-13

    Mar-12

    Net Sale

    49.180

    38.170

    35.550

    20.480

    13.710

    YOY%

    29%

    7%

    73%

    49%

     

    Other Income

    0.140

    0.010

    0.020

    0.010

    0.000

    Total Income

    49.320

    38.180

    35.570

    20.490

    13.710

    Total Expenses

    46.740

    35.570

    34.200

    19.260

    12.900

    Interest Expense

    1.790

    1.560

    1.140

    1.190

    0.940

    Depreciation & Amortization

    0.500

    0.460

    0.490

    0.380

    0.290

    TAX

    0.860

    0.870

    0.510

    0.350

    0.530

    PBDIT

    4.890

    4.620

    3.000

    2.790

    2.060

    PBT

    2.600

    2.600

    1.370

    1.220

    0.830

    Net Profit

    1.710

    1.740

    0.870

    0.870

    0.290

    Equity

    3.970

    2.900

    2.900

    2.250

    2.000

    EPS

    4.300

    6.000

    3.000

    3.900

    1.500

    OPM Margin %

    9.620

    12.100

    8.380

    13.620

    14.880

    Debt to Equity Ratio

    0.820

    1.390

    2.280

    3.080

    2.350

    Interest Coverage Ratio

    2.450

    2.670

    2.200

    2.030

    1.880

    Current Ratio

    1.150

    1.120

    1.125

    1.085

    1.081

    ROCE

    10.450

    12.810

    6.850

    8.250

    3.970

    ROE/RONW

    13.630

    25.230

    19.110

    25.820

    12.910

     

    • Company has reported 35 lakhs earning in foreign currency for the financial year 2016.

     

     

    Part – 4 Financial data Chart

     

    Year

    Net Sales (Cr.) 

    2012

    13.71

    2013

    20.47

    2014

    35.55

    2015

    38.16

    2016

    49.18

     

    Year

    PAT

    2012

    0.29

    2013

    0.87

    2014

    0.89

    2015

    1.74

    2016

    1.71

     

     

     

    Year

           Debt/Equity Ratio

    2012

    2.35

    2013

    3.08

    2014

    2.28

    2015

    1.39

    2016

    0.82

     

     

    Part - 4 Investment Rationale

     

    • Company has increased production capacity from 1,50,000 sheets/month to 2,20,000 sheets/month from December 2015 due to strong domestic demand and it is a strong sign for the company to grow as management is investing in capex.
    • Strong Management and Promoters group
    • During the year revenue of the company has increased from Rs.3817.63 to 4931.75 Lakhs
    • During the financial period company’s reserves and surplus increased from Rs. 398.30 to 573.90 Lakhs. The reserve further increased by the Rs. 322.20 lakhs on account of share premium received pursuant to issue of shares through IPO.
    • The Profit of the company decreased in spite of increase in sales was mainly due to increased competition in the market.

     

     

    Part - 5 Recommendation 

     

    • From the above financial data, company has posted over 38 % CAGR in five years ending March 2016 while net profit came down 1.72 % on YOY basis.
    • From my point of view, any company has report CAGR above 20 is a good indication. Ambition Mica Net profit has posted over 50% CAGR in five year ending March 2016 which is above 20%.
    • Interest coverage ratio is 2.450 and in my point of view, interest coverage ratio of below 1.5 should raise doubts the company’s ability to meet the expenses on its borrowings.
    • Debt/equity ratio is 0.820 which is below 1
    • Current ratio is 1.15 and in my point of view, higher current ratio healthier short term liquidity comfort level. A current ratio below 1 indicates that the company may not be able to meet its obligations in the short run.
    • At CMP 50, Stock is trading at PE multiple of 11.6X to trailing twelve month earning whereas industry average is 40X. This makes the stock undervalue at current price.

     

    So I value the company at conservative PE of 20X the price comes at Rs.200 for the 3 year.

     

     

    Please note:

    Note: The articles are not research reports but assimilation of information available on public domain and it should not be treated as a research report.

    Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

    Disclosure: It is safe to assume that I might have the discussed companies in my portfolio and hence my point of view can be biased. Readers should consult registered consultants before making any investments.

     

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