Globus Spirits – Multibagger Analysis

In this post we can explore Globus Spirits as a Multibagger base on Warren Buffet methodologies.

Globus Spirits Ltd.

NSE Code GLOBUSSPR.NS
BSE Code 533104
URL http://www.globusspirits.com/
CMP 125.22
Free Report Yes
Publish Date Feb-07-2020

About Company

Founded in 1992, Globus Spirits is the Largest grain based distilleries in India headed by Mr. Ajay Kumar. It is into liquor business for last 25 years and commenced operation in Haryana currently leading player in Haryana, Rajasthan and Delhi.  It is using 360 degree business model where IMIL (Indian Manufactured Indian Liquor), IMFL (Indian Manufactured Foreign Liquor), Franchisee Bottling all are held.

The company recorded 20% growth in Net Income & 400% growth in Net Profit.  Liquor Business in India is expected to grow at 8% per annum till 2025.  Company is running at 85% capacity utilization of 160 million liter.

globus-spirits-multibagger-futurecaps

Company manufactures the following brands including joined manufacturing for new Brand UNIBEV which is under leadership of Vijay Rekhi (veteran UB Spirits) link link

globus-spirits-brands-multibagger-futurecaps

Warren Buffet, Value & Growth Checklist

Following are the Checklist parameters:

Capitalization 350 CR – Can provide ample growth in capitalization green
History of Consistently Increasing Sales, Earnings & Cash Flow Yes. green
Durable Competitive Advantage Moderate. yellow
Future Growth Drivers / Sector Growth Yes. green
Conservative Debt (long term debt < 3 Net Profit) No, Debt is high. red
Debt Equity Ratio, Current Ratio Debt is high.

Current Ratio is 0.84

yellow
Return on Equity must be Above Average 8% red
Low CAPEX required to maintain current operations No. yellow
Inventory Turnover Ratio, Debtor Days, ROCE Moderate yellow
Management is holding / buying the stock Yes, Increasing holdings by Promoters green
Market Price < Intrinsic Value Yes with 90% Discount. Intrinsic Value Calculator green
Stock Price is consolidating (now) Yes green
Stock Price is growing in past years along with EPS growth No, North-South curves exists red
Consolidated PE, PB Ratio, PEG Ratio PE 9

PB 0.9

PEG 0.1

superb
Cash Flow Positive, Net Profit % greater than 8% Cash Flow: NegativeNet Profit %: No red
Paying Dividends, Tax No Dividends

Yes Tax

yellow
EPS Growth Rate 50% above past 2 years superb
Jump in Trailing Result EPS Yes green
Jump in Quarterly Result EPS YesBut, March q-o-q shows decline in profits green
Expected Gain in 5 Years 300-500% green
Price Movement Graph, 52 Week High & Low Okay green
Volume Analysis 1.2 Lakh yellow
Power of Brand Yes green
Corporate Governance, Reputation of Leaders Yes green
Fraud reported No. green

Positive Factors

Here are the positive factors regarding Globus Spirits

  • Company is in growth spree
  • Company is quoting near book value – Safe to enter now
  • Promoters are increasing stake
  • UNIBEV alliance will help to grow faster
  • Budget 2020 will help growth in Sales

Concern Factors

Here are the concern factors regarding Globus Spirits

  • Debt is high
  • Cash Flow is negative
  • Government Regulations can impact Profitability

Summary

Based on the above analysis I would like to say that the Globus Spirits possess Multibagger Stock properties and one can Invest in 2020.  However one should not expect high compounded returns from this stock.  It can be considered as Moderate Risk Moderate Returns investment.

image

Note

This is a Free Multibagger recommend as a Backup to the Paid Multibagger which is also in Alcohol sector.  Do not waste time as Market is still low for 5-Year Full Cycle Multibagger Returns

Renew your subscription to know the Paid Stock & Get free Post Budget Report & Essential Training too.  3 Year Subscription – link.

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