Globus Spirits – Multibagger Analysis

Update: The current Corona impact could have changed the Future Outlook of this company sector although it Gained 20% from recommended price.  You should take updated Inference on Investing this multibagger. You can check other stocks from our latest Multibaggers pack.

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Futurecaps is a SEBI Registered Research Analyst providing Multibagger service to Indian Stock Market.

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.

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

Warren Buffet, Value & Growth Checklist

Following are the Checklist parameters:

Capitalization	350 CR – Can provide ample growth in capitalization
History of Consistently Increasing Sales, Earnings & Cash Flow	Yes.
Durable Competitive Advantage	Moderate.
Future Growth Drivers / Sector Growth	Yes.
Conservative Debt (long term debt < 3 Net Profit)	No, Debt is high.
Debt Equity Ratio, Current Ratio	Debt is high. Current Ratio is 0.84
Return on Equity must be Above Average	8%
Low CAPEX required to maintain current operations	No.
Inventory Turnover Ratio, Debtor Days, ROCE	Moderate
Management is holding / buying the stock	Yes, Increasing holdings by Promoters
Market Price < Intrinsic Value	Yes with 90% Discount. Intrinsic Value Calculator
Stock Price is consolidating (now)	Yes
Stock Price is growing in past years along with EPS growth	No, North-South curves exists
Consolidated PE, PB Ratio, PEG Ratio	PE 9 PB 0.9 PEG 0.1
Cash Flow Positive, Net Profit % greater than 8%	Cash Flow: NegativeNet Profit %: No
Paying Dividends, Tax	No Dividends Yes Tax
EPS Growth Rate	50% above past 2 years
Jump in Trailing Result EPS	Yes
Jump in Quarterly Result EPS	YesBut, March q-o-q shows decline in profits
Expected Gain in 5 Years	300-500%
Price Movement Graph, 52 Week High & Low	Okay
Volume Analysis	1.2 Lakh
Power of Brand	Yes
Corporate Governance, Reputation of Leaders	Yes
Fraud reported	No.

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.

Note

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