CPT V24P7-Art1 (Content).pmd - Taxmann
CPT V24P7-Art1 (Content).pmd - Taxmann
CPT V24P7-Art1 (Content).pmd - Taxmann
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Stock Market<br />
Scripscan : Hyderabad Industries Ltd.<br />
CMP : 467.45<br />
Traded in : NSE-BSE<br />
Marketcap : 300 crores<br />
Risk category : Low<br />
Returns expected : 40% CAGR for next<br />
5 years.<br />
Story : Here’s a company which has excited<br />
me a great deal and gives me the hunch of<br />
digging out a huge infinite bagger in the coming<br />
years. I was looking for a counter which would<br />
be nearly debt free (high inflationary environment,<br />
double digit interest rate), should have<br />
a great brand value, better if was a household<br />
name, market leader and domestic company<br />
(recall our jockey company, Page Ind ? How<br />
about Hawkins or a TTK Prestige? Ah! all<br />
` 10-15-20 baggers, attractive valuations (to<br />
get that great midnight comfort and sleep),<br />
good dividend yield (so that if it doesn’t perform<br />
the dividend cheque may come to the rescue)<br />
and a business model which would be simple<br />
to understand coupled with stunning prospects<br />
and potential. Hyderabad Industries Ltd. just<br />
fits in everything so perfectly, at least as per<br />
my norms!<br />
Hyderabad Industries (HIL) is a flagship<br />
company of C K Birla Group. HIL’s product<br />
range includes Fibre Cement roofing sheets<br />
(Charminar), Autoclaved Aerated Concrete Blocks<br />
and Panels (Aerocon) and Calcium Silicate<br />
insulation products (HYSIL) and Jointing material<br />
for gaskets. HIL’s most modern manufacturing<br />
plants are located at 12 locations in 8 States,<br />
viz., Andhra Pradesh, Gujarat, Haryana,<br />
Jharkhand, Kerala, Maharashtra, Orissa and<br />
Uttar Pradesh. HIL, being a market leader<br />
over several years now, has a strong and extensive<br />
distribution network with nearly 8000 sale outlets<br />
spread across the country which are serviced<br />
by its 45 depots. Company is the market leader<br />
in the asbestos-based roofing industry, with<br />
714<br />
MULTIBAGGER STOCK IDEA<br />
August 1 to 15, 2012 u TAXMANN’S CORPORATE PROFESSIONALS TODAY u Vol. 24 u 94<br />
an estimated market share of 21%. Its famous<br />
brand is ‘Charminar’ that has established over<br />
six decades now and enjoys a premium of 6-<br />
8% over others in the market. From a mere<br />
roof manufacturing company, this company<br />
has evolved into a multi-product, green building<br />
products organization. The demand for these<br />
building products is likely to stay firm led by<br />
growth in rural housing and price advantage<br />
of asbestos sheets over galvanized iron sheets.<br />
It has gradually diversified from an one-product<br />
company into other areas such as autoclaved<br />
aerated concrete (AAC) blocks, thermal insulation<br />
products and other products like pre-fabricated<br />
building panels, Hysil powder, spares and<br />
accessories, etc. The expansion of the capacities<br />
and the overall buoyant economic scenario are<br />
boosting demand from this segment. Over half<br />
of our population still lives under thatched<br />
roofs (Kuccha roofing) and clay tiles. Thatched<br />
roof is not waterproof and poses a fire hazard<br />
besides needing regular replacement. Tiled roof<br />
needs recurring maintenance and is also not<br />
safe. Hence, security concerns coupled with<br />
rising income levels, have given impetus to<br />
the desire to shift from kuccha houses to pucca<br />
houses. Asbestos Cement Sheets (ACS) are good<br />
insulators of heat and are sound as compared<br />
to thatched, tiled or galvanized metal roofs.<br />
Additionally, ACSs are water resistant and<br />
fire resistant. ACSs are also relatively cheaper<br />
than galvanized metal roofs. ACSs require<br />
minimal maintenance and infrequent<br />
replacement, unlike thatched and tiled roofs.<br />
Hence, whenever disposable income increases,<br />
switching to ACS roofs is the most obvious<br />
choice. The ACS industry grew by 5% in FY10,<br />
by 3.5% in FY11 and further by 7% in FY12.<br />
The industry is estimated to grow at 6-9%<br />
over the next few years on account of increased<br />
income levels in rural areas coupled with various<br />
initiatives by the Central Government for<br />
affordable housing schemes, such as Indira<br />
Awas Yojana, Golden Jubilee Rural Housing<br />
Finance Scheme and Pradhan Mantri Adarsh