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.

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 bce05 green e1587451073732
History of Consistently Increasing Sales, Earnings & Cash Flow Yes. bce05 green e1587451073732
Durable Competitive Advantage Moderate.
Future Growth Drivers / Sector Growth Yes. bce05 green e1587451073732
Conservative Debt (long term debt < 3 Net Profit) No, Debt is high. 2d260 red
Debt Equity Ratio, Current Ratio Debt is high.

Current Ratio is 0.84

Return on Equity must be Above Average 8% 2d260 red
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 bce05 green e1587451073732
Market Price < Intrinsic Value Yes with 90% Discount. Intrinsic Value Calculator bce05 green e1587451073732
Stock Price is consolidating (now) Yes bce05 green e1587451073732
Stock Price is growing in past years along with EPS growth No, North-South curves exists 2d260 red
Consolidated PE, PB Ratio, PEG Ratio PE 9

PB 0.9

PEG 0.1

bce05 green e1587451073732
Cash Flow Positive, Net Profit % greater than 8% Cash Flow: NegativeNet Profit %: No 2d260 red
Paying Dividends, Tax No Dividends

Yes Tax

EPS Growth Rate 50% above past 2 years bce05 green e1587451073732
Jump in Trailing Result EPS Yes bce05 green e1587451073732
Jump in Quarterly Result EPS YesBut, March q-o-q shows decline in profits bce05 green e1587451073732
Expected Gain in 5 Years 300-500% bce05 green e1587451073732
Price Movement Graph, 52 Week High & Low Okay bce05 green e1587451073732
Volume Analysis 1.2 Lakh
Power of Brand Yes bce05 green e1587451073732
Corporate Governance, Reputation of Leaders Yes bce05 green e1587451073732
Fraud reported No. bce05 green e1587451073732

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

Futurecaps Advisor Team has invested in ANOTHER Alcohol Sector Multibagger.  Subscribe to Premium Package to get the scrip & gain 500% returns link.

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