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September 1, 2014

Bhageria Dye-Chem Ltd. – Multibagger Analysis

by Futurecaps Advisor

BHAGERIA DYE CHEM LIMITED was established in 1989 with an objective to serve the dyes & intermediates industry all over the globe. Company commenced its operations by setting up a Vinyl Sulphone Plant at Vapi (Gujarat) with capacity of 540 T.P.A. which has now expanded to 3600 T.P.A. Subsequently Company has gone for further expansion in other Dyes intermediates & Dyestuffs.

The company successfully incorporates the innovative trends, total quality management and proficiency in work process through advanced research and analysis.

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Company URL: http://www.bhageriagroup.com/

Screener URL: http://www.screener.in/company/?q=530803

CMP: 203

Warren Buffett Checklist

History of Consistently Increasing Sales, Earnings & Cash Flow Yes. image
Durable Competitive Advantage

Company have good export-exposure, but cannot find a solid point on this.

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Future Growth Drivers Future for next 2 years looks good. image
Conservative Debt (long term debt < 3 Net Profit) Good. image
Debt Equity Ratio At 1.16 which is high for this sector. image
Return on Equity must be Above Average 52% which is extremely high, should cool down. image
Low CAPEX required to maintain current operations Moderate. image
Management is holding / buying the stock There is a rise & fall in holdings for past 3 years. image
Price is Under Valued (< intrinsic value) Considering EPS growth of 30% above, the stock is undervalue in Intrinsic Value. image
Stock Price is consolidating (now) Company witnessed 10 times growth in current year. Be watchful. image
Stock Price is growing in past years along with EPS growth Yes. But only in past 1-2 years; before that company was under loss. image

Additional Futurecaps Checklist

Consolidated PE, PB Ratio PE 5 (good); PB 4 (high) image
Cash Flow Positive, Net Profit % greater than 8% NP% comes around 7%. image
Paying Dividends, Tax Yes. image
EPS Growth Rate 40% image
Latest Quarter EPS Growth 1000% for q-o-q image
Expected Gain in 5 Years I keep 30% as EPS growth for extreme growth stories.  Considering 30% EPS growth & PE resizing to 10 on industry average, 5 year returns could be 5X-10X. image
Price Movement Graph, 52 Week High & Low 52wh is high compared with 52wl.  image
Volume Analysis Very low volume; Could be the reason prices fired up quickly. image
Power of Brand Good. image
Corporate Governance, Reputation of Leaders Good. image
Fraud reported Not. image

 Declaration

Company is having Multibagger properties.  But, viewing the 1000% spike on recent, I recommend to be cautious with this stock. 

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Allocation

1% to 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.

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