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30
Jun

Mirza International – Multibagger Analysis

In this post we can analyze the possibility of Mirza International  as a potential multibagger.

We are holding a research on this as sources say Top Investor Rakesh Jhunjhunwala is increasing holding in the company.

The Company

Mirza International Limited is a frontrunner in the manufacturing and marketing of leather and leather footwear.  The company exports its products globally & holds reputed brands like Red Tape.

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Website: http://www.mirza.co.in/

Analysis Link: http://www.screener.in/company/?q=526642

Warren Buffett Checklist

History of Consistently Increasing Sales, Earnings & Cash Flow Please refer analysis link. image
Durable Competitive Advantage
  • Yes. Through power of brands, owning manufacturing, designing facilities & cost-optimizations.
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Future Growth Drivers Current growth in Indian retail market & Promotion of export market policies should help the company well. image
Conservative Debt (long term debt < 3 Net Profit) Current Liabilities is around 100 crore & Latest net profit is around 44 crores. So pass. image
Return on Equity must be Above Average ROE is 18+ and above the required 15. image
Low CAPEX required to maintain current operations Not. image
Promoter Holding %, Management is holding / buying the stock Promoter Holding 66%, Promoters is buying back more shares. image
Price is Under Valued (< intrinsic value) Almost on the same bar. image
Stock Price is consolidating (now) Yes. image
Stock Price is growing in past years along with EPS growth Yes, but slow image

Additional Futurecaps Checklist

PE, PB Ratio PE is around 7 and PB is around 1 which are good ratios in current market boom scenario. image 
Cash Flow Positive, Net Profit % greater than 8% Cash Flow from operating activity is positive.  Net Profit is less than 8% as this sector requires high amount of ads & operating expenses. image
Paying Dividends, Tax Yes. image 
EPS Growth Rate 10-20% for the past 3 years, thought the latest year shows flat.  image 
Expected Gain in 10 Years 2X-5X in 5 years; The EPS growth is slow – so do not expect high gains.  image
Power of Brand Branding attracts more sales, more profit margins!  image
Corporate Governance, Reputation of Leaders Good governance history.  image
Fraud reported No fraud reported.  image

Declaration

Here by we declare that Mirza International is a multibagger with possible 2X-5X gain in next 5 years; watch quarterly results carefully for hold/sell decisions.

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It is a potential multibagger like Page Industries with good brands under hold, but watch the quarterly results carefully.

Allocation

1-2% of your portfolio.

Disclaimer

Futurecaps recommends 20 to 25 multibaggers per year, we recommend a 25% to 50% allocation of your savings in equity.  The stocks recommended here are gone through Analysts of several years experience in stock market.  Although they were successful in predicting future multibaggers, the overall stock market is a risky game.  So we recommend the reader to put his/her own thoughts & invest wisely.

2
Jun

SENSEX FIRST TARGET 33000!!

Futurecaps received following queries & I would like to share the answers for the same.

Will Sensex reach 40000?

I cannot see such a too-ambitions targets.

How you can conclude that?

Basically, the stock market runs through cycles which are reflection of economy. 

When the economy is really good, the stock prices deviates too-high from the fundamental value.  For example a PE 10 company reaches PE 50, which is over-priced considering the growth & dividend yield factors.

HNI (High Network Individuals), FII (Foreign Institutional Investors), DII (Domestic Institutional Investors) are major players who keep eye on barometers of economy.

Stock Market reflects 6 months before the economy.  It means, if the economy is going to be improved in 6 months, then stock market will reflect that today.

It also means, if economy is going to collide in 6 months, the market will crash today.

The Bull Market will revert 6 months before actual economy bust!

Can India be isolated from a Global crash as Modi is ruling?

I cannot see any such protection shield by Modi.  India is heavily depending on Global in the matter of services & exports. 

Any blockage of money inwards will definitely impact the government taxes, infrastructure growth & thus reflecting in the profitability of all sectors.

Again, Indian markets have a keen tendency to over-look global markets & reflect their boom or crash.

What is your target value for SENSEX?

I would give any initial target of 33000 for SENSEX within next 2 years.  I will be recommending to SELL 50% of your portfolio during the point.

The second target would be around 35000 – 37000 which is not clear from current stand point of view.  I would recommend selling the remaining portfolio in that range.

You can invest in Gold or Debt funds after the sale, to protect from long term capital gain tax.

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Where should we allocate money?

I recommend you put money in the following 3 scrips:

  1. Undervalued Blue chips
  2. Midcaps
  3. Smallcaps

Note

Stock Market requires lot of patience & do not over trade.  I recommend keeping 50% of your money in real-estate, 25% in stock market & remaining 25% in easily-liquidatable debt funds.

Author: Futurecaps Chief Analyst