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Globus Spirits – Multibagger Analysis

Globus Spirits – Multibagger Analysis

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

Globus Spirits Ltd.

NSE CodeGLOBUSSPR.NS
BSE Code533104
URLhttp://www.globusspirits.com/
CMP125.22
Free ReportYes
Publish DateFeb-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:

Capitalization350 CR – Can provide ample growth in capitalizationgreen
History of Consistently Increasing Sales, Earnings & Cash FlowYes.green
Durable Competitive AdvantageModerate.yellow
Future Growth Drivers / Sector GrowthYes.green
Conservative Debt (long term debt < 3 Net Profit)No, Debt is high.red
Debt Equity Ratio, Current RatioDebt is high.

Current Ratio is 0.84

yellow
Return on Equity must be Above Average8%red
Low CAPEX required to maintain current operationsNo.yellow
Inventory Turnover Ratio, Debtor Days, ROCEModerateyellow
Management is holding / buying the stockYes, Increasing holdings by Promotersgreen
Market Price < Intrinsic ValueYes with 90% Discount. Intrinsic Value Calculatorgreen
Stock Price is consolidating (now)Yesgreen
Stock Price is growing in past years along with EPS growthNo, North-South curves existsred
Consolidated PE, PB Ratio, PEG RatioPE 9

PB 0.9

PEG 0.1

superb
Cash Flow Positive, Net Profit % greater than 8%Cash Flow: NegativeNet Profit %: Nored
Paying Dividends, TaxNo Dividends

Yes Tax

yellow
EPS Growth Rate50% above past 2 yearssuperb
Jump in Trailing Result EPSYesgreen
Jump in Quarterly Result EPSYesBut, March q-o-q shows decline in profitsgreen
Expected Gain in 5 Years300-500%green
Price Movement Graph, 52 Week High & LowOkaygreen
Volume Analysis1.2 Lakhyellow
Power of BrandYesgreen
Corporate Governance, Reputation of LeadersYesgreen
Fraud reportedNo.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.

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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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About Futurecaps

Futurecaps is a 12+ year experienced Indian Stock Market Advisory with SEBI Registration.

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