How an investment of Rs.10000 grew to Rs.535 Crores in 34 years

Courtesy: getricher.in

If I had the technology to send a message back in time, I would tell my father in 1980 to “Use Rs.10,000 to buy 100 shares of Wipro as an one-time investment and never sell it for the next 30-35 years.” If he had done that his investment would now be worth about Rs.535 crores. Yes, you read that right. Crores, not thousands or lakhs.

Rs.10,000 to Rs.535 Crores

Lets just assume that you bought 100 shares of Wipro each at a face value of Rs.100 in the year 1980. Total investment: Rs.10,000. You don’t touch it at all, no profit booking or buying more shares. Occasionally companies provide benefits to its shareholders by way of corporate actions. They could provide bonus shares for shares that you hold, they could do a stock split where a high face value share would be broken down into smaller face value shares but number of shares increases proportionately, etc.

Wipro has done various such bonuses and stock splits in its history of 1980-2014. 

Wipro Investment growth

YEAR	ACTION	NUMBER OF SHARES
1980	Initial Investment	100
1981	1:1 Bonus	200
1985	1:1 Bonus	400
1986	Stock split to FV Rs.10	4,000
1987	1:1 Bonus	8,000
1989	1:1 Bonus	16,000
1992	1:1 Bonus	32,000
1995	1:1 Bonus	64,000
1997	2:1 Bonus	1,92,000
1999	Stock split to FV Rs.2	9,60,000
2004	2:1 Bonus	28,80,000
2005	1:1 Bonus	57,60,000
2010	2:3 Bonus	96,00,000

After the year 2010, there were no more bonuses or stock splits. But with just that initial investment of Rs.10,000 (100 shares) you now would end up with 96,00,000 shares of the company because of all the stock splits and bonus shares. Current stock price of Wipro is about Rs.557 per share, as of 7 April, 2014.

Rs.557 × 96,00,000 = Rs.534,72,00,000 or about Rs.535 crores. That is a CAGR (Compound Annual Growth Rate) of 47.39%. Does any of your bank FD give you 47% annual interest rate? It was all possible because of the free shares that the company gave to its shareholders as an incentive for investing in their company. If you immediately needed to liquidate this entire holding today (urgent need for >Rs.500 crores?), you can do it and you would have to pay a grand total of 0% tax on your profits, because long-term capital gains in equity is tax-free.

JHS Svendgaard: Update

This is to inform that the on-going disputes at various courts between the company (JHS Svendgaard) and various group companies of Procter & Gamble Inc. in India, have been settled with mutual consent and concluded positively for JHS 

Multibagger of 2017 : JHS Svendgaard

JHS Svendgaard Laboratories may be a multibagger stock in 2017. The stock looks good for a buy on declines for a long-term investment portfolio.

It has all the qualities that investors and traders look for in a multibagger stock such as debt-free status, good management, operating capacity, strong brands etc.

Business

Starting with manufacturing of only Toothbrushes the company widened its scope to Toothpastes, Mouthwash and Denture Tablets and today is an oral care product manufacturer and exporter. Apart from working on its own brands the company also offers Contract Manufacturing Partnership to brands in the domestic and the international market. One of the most prominent brands manufactured under the company’s name is Dr. Gold which was launched in April 2009 with economy, mid economy and premium
Toothbrush categories.Some of the prominent brands partnered with in the domestic market are P&G, Amway India Enterprises Pvt. Ltd., Dabur India Limited, Elder Health Care Limited, J. L. Morison’s India Limited and in the international market are – Dr Fresh

Tano mauritius,the private equity firm which got a great success ratio, bought shares worth 25crs at 98rs around 2010

JHS SVENDGAARD is a  perfect fmcg proxy.The largest toothbrush manufacturer from India(300 million tooth brushes).It caters to the need of 1 trillion Proctor and gamble in our country.The company has got number of amazing tax and excise benefits. Replacement cost of its assets would be minimum 300-400crs. Present market-cap is only 75crs.

JHS has a client base of strong & leading players in the Industry.

• Proctor & Gamble : JHS manufactures ‘ORAL B’ toothbrushes for P&G.
• Pantaloon : ‘SACH’ brand for toothpaste & toothbrush.
• Dr. Fresh : ‘Dr.Fresh’ is the largest selling oral care brand in America.
• Himalaya : Leaders in premium dental cream market.
• Dabur : Owns big brands like ‘Promise’, ‘Babool’, ‘Dabur Red’, ‘Meswak’.
• Elder Healthcare : Sells mouthwash & other dental care under ‘AMPM’ brand.
• Aquawhite : Sells premium category mouthwash & dental whitening gel.
• Lavoris : One of the leading oral care brands in America.

Another big news is patanjali is in talks with jhs for contract manufacturing as it has huge spare capacity and good quality control

Promoters hike stake

Recently, total warrants of Rs 3.3 crore were issued. Out of this Rs 1.2 crore have been converted which is promoters and non promoters both in accordance with the SEBI guidelines allowed by the promoters.

After the warrant conversion, the promoter holding in the company goes up to 38 percent of the total equity. The Company gets Rs 11 crore in the form of converted stocks.

JHS Svendgaard Laboratories already has about Rs 5.5 crore of the warrant money.

The promoter holding will go up from 38 percent currently to 43 percent on full conversion.

Debt Free

JHS Svendgaard Laboratories would be a debt free company as on March 31st 2016. It will have no debt on books whether it is in form of secured or unsecured loan.

Profit making

The losses have started coming down in FY17 because as the Company improve the capacity utilisation it has a huge asset base and needs to churn out production from that asset base.

JHS Svendgaard Laboratories is expected to become profitable in the first quarter of FY17. It is working hard and trying to make it as soon as possible.

Revenue Growth

In the last two years JHS Svendgaard Laboratories has grown almost 80-85 percent on revenue basis. If it is able to utilise capacities, it should be at least between 30 -35 percent this year also because the baseline has almost tripled as compared to the last two years.

USE ALL THE DECLINE IN THE MARKETS TO BUY THIS STOCK SOME DAY MARKET AND SENTIMENTS WILL TURN AND DURING GOOD TIMES WE WONT GET THIS STOCK AS THE STOCK IS DEBT FREE AND BUSINESS IS GLOBAL AND REPLACEMENT COST OF THE SAME IS BETWEEN 300 TO 400 CRORES WHILE MARKET CAP IS JUST 75 CRORES 

Huhtamaki PPL -- A Good Buy.

About Huhtamaki PPL

Huhtamaki PPL offers a wide portfolio of packaging solutions that include Flexible Packaging,Labelling Technologies and Specialised Cartons. And all this supported by the Packaging Machine Division to provide the customer with Total packaging solutions. With Three state of the art, fully integrated manufacturing facilities at Thane, Silvassa and Hyderabad; highly skilled and experienced staff, PPL is capable of working with the customer from product inception to the super market and with complete control and confidentiality.

Huhtamaki PPL is in the Packaging sector. The current market capitalisation stands at Rs 1,345.17 crore.The company has reported a consolidated sales of Rs 306.63 crore and a Net Profit of Rs 19.25 crore for the quarter ended Jun 2014.

The company management includes Suresh Gupta - Chairman, A Venkatrangan - Executive Director, Arunkumar Gandhi - Director, P V Narayanan - Director, Jukka Moisio - Director, R K Dhir - Director, S K Palekar - Director, Nripjit Singh Chawla - Director, Shashank Sinha - Non Executive Director.

It is listed on the BSE with a BSE Code of 509820 and the NSE with an NSE Code of PAPERPROD.

Its Registered office is at Unit No-12A-06, 13th Floor, Parinee Crescenzo, Plot No C-38/C-39,,G-Block, Behind MCA, Mumbai,Maharashtra - 400051.

Their Registrars are Sharepro Services (India) Pvt.Ltd.

Why Huhtamaki PPL 

HPPL is a pioneer and the market leader in flexible packaging in India and has a market share of 60% in premium flexible packaging business and about 9% overall in the organized market, which is of about $2billion by size. It has its manufacturing facilities at Thane, Silvassa, Hyderabad and Rudrapur. The current installed capacity of HPPL for paper & films in 52,000 MT and company’s capacity utilization rate is 75% to 80%. HPPL successfully meets the packaging needs of almost entire range of FMCG segments. Huhtamaki PPL Client list that includes Levers, Nestle, Cadbury, Britannia, Glaxo Smithkline, Coca Cola, Perfetti, Dabur, Marico and P&G. HPPL thus enjoys Competittive advantage due to use of its superior technology & capability. 

Huhtamaki PPL has the unique privilege of being backed by both of these super-savvy investors. While Dolly Khanna holds 949,887 shares (she is the single largest individual shareholder), HDFC Mutual Fund holds 33,30,525 shares.

Now, to our good fortune, Mehernosh Panthaki of HDFC Sec has put the spotlight on Huhtamaki PPL (HPPL). In a crisp analysis, Mehernosh Panthaki has explained that a lot of great things are going on at HPPL.

Firstly, Huhtamaki’s consolidated net sales are expected to grow by 41.8% on CAGR basis over CY13-16 on account of the consolidation of PPIL, capacity expansion & improving demand for flexible packaging (due to revival in FMCG industry). The capacity expansion, NASP initiatives would enable HPPL to improve its volume growth and boost its revenues & profits.

Secondly, the acquisition of PPIL (Positive Packaging) would almost double HPPL’s turnover and is likely to be EPS accretive. It would enable HPPL gain further bargaining power with its customers, to extend its customer network and would also help synergies in sourcing of inputs and up-gradation in technology.

Thirdly, the structure of the deal seems to be positive for the minority shareholders of HPPL and that the acquisition reflects the parent company’s increasing interest in Indian operations.

Fourthly, HPPL could be a delisting candidate given that Huhtamaki has hiked its holding in HPPL since Feb 2014 from 60.8% to 68.8% (till date) and changed the name of the company from Paper Products to Huhtamaki PPL. The fact that Huhtamaki has complete control over almost all its other subsidiaries point towards HPPL being a probable candidate for de-listing over the medium to long term, Mehernosh adds.

At the end, Mehernosh advises a buy on the basis that HPPL is capable of trading at 13xCY16E EPS, which gives a price target of Rs. 245. Given, the CMP is Rs. 184, we are talking about a 30% upside.

Of course, if Dolly Khanna’s magic wand gets to work, then only the sky is the target for Huhtamaki PPL!!

Vineeta Mahnot Puts A Buy On Sonata Software after RS Software

Vineeta Mahnot, the charming stock picker with Hem Securities, appears to have developed a liking for software stocks. After the stupendous performance of Tata Elexsi and RS Software, Vineeta’s latest pick is Sonata Software

When you talk about Vineeta Mahnot and her stock picks, you must use a hushed tone. Why? Because she has more multibagger stocks to her credit than any other stock picker.

Vineeta’s latest stock pick is Sonata Software. She points out that Sonata has reported excellent results for the June 2014 quarter with revenues, operating profit and margins showing a steep increase. The company is also debt-free.

At the end of a succinct analysis, Vineeta recommends a buy on the basis that:

“With improving operating metrics, restructuring process paying off, healthy balance sheet, large deal wins and improving margin profile; Sonata Software Ltd. growth prospects and profitability looks optimistic. We believe the company is trading at an attractive valuation at 11.88x and 8.94x of FY15EPS of Rs.10.70 and FY16EPS of Rs.14.22. We initiate a ‘BUY’ on the stock with a target price of Rs.175 (appreciation of about 37%) with the medium to long term investment horizon.”

About Sonata Software

Sonata is a global IT services company with a track record of serving leading Independent Software Vendors and Enterprise Customers around the globe. Its unrelenting focus on going deeper with domain knowledge, technology expertise and customer commitment, coupled with people skills, strong delivery mechanism and expanding global footprint makes it a strategic IT partner of choice for best of breed customers. Maintaining its growth momentum across businesses and geographies, Sonata has been enhancing stakeholders’ value sustainably. 

Standalone financials

Total income has shown a growth of 44%, Earnings before Interest, Depreciation and Taxes (EBIDTA) a growth of 128% and Net Profit growth of 242%. Earnings per share at 5.12 showed a growth of 242%.

Now, you have to ponder over the difficult question as to whether you can really ignore Vineeta Mahnot’s stock recommendation.