Sanwaria Consumer Ltd. was a Darling Stock of Many during the 2016-2018 period. It gave Multibagger Returns & Later cooped to deep crashes! Since our Paid Subscriber (Mr. Srinivasa) is inquiring on this stock we are providing a Quick Analysis on same.
We are saying ahead that this company is NOT A MULTIBAGGER on Value Investing grounds analysis.
Warren Buffett, Value & Growth Checklist
Following are the Checklist parameters we applied on Sanwaria Consumers.
|Capitalization||200 CR – Good for giving multibagger returns.|
|History of Consistently Increasing Sales, Earnings & Cash Flow||No. Recent Sales are showing Trouble in Growth.|
|Durable Competitive Advantage||No. Company is Struggling on Competition|
|Future Growth Drivers / Sector Growth||Future Growth after Corona Troubles is anticipated to be 10% based on past years average|
|Conservative Debt (long term debt < 3 Net Profit)||Huge Debts|
|Debt Equity Ratio, Current Ratio||Huge Debts|
|Return on Equity must be Above Average||27%|
|Low CAPEX required to maintain current operations||No|
|Inventory Turnover Ratio, Debtor Days, ROCE||ITR not good, Debtor Days Increasing, ROCE is low.|
|Management is holding / buying the stock||No. Promoters sold 17% in last 3 years.|
|Market Price < Intrinsic Value||Intrinsic Value is screwed up due to No EPS Growth. Intrinsic Value Calculator|
|Stock Price is consolidating (now)||Yes.|
|Stock Price is growing in past years along with EPS growth||Yes|
|Consolidated PE, PB Ratio, PEG Ratio||PE is bad. PB is good. PEG is bad.|
|Cash Flow Positive, Net Profit % greater than 8%||Negative. Net Profit % is < 1%|
|Paying Dividends, Tax||Not clean. Fraud Analysis required.|
|EPS Growth Rate||Recent Growth is not there.|
|Jump in Trailing Result EPS||No|
|Jump in Quarterly Result EPS||No.|
|Expected Gain in 5 Years||Can’t Predict as company is in loss of 651 crores currently.|
|Price Movement Graph, 52 Week High & Low||Price closer to 52 week high|
|Volume Analysis||High Volume (crash high on bear times)|
|Power of Brand||Bad.|
|Corporate Governance, Reputation of Leaders||Bad|
|Fraud reported||Need deeper check.|
Following are the Concern Factors on Sanwaria Consumer company.
- Sales are not Increasing for last few years. Due to this the Profitability of the company is affected. Unless you know any Turnaround Story this company is Extremely bad to invest in.
- Debt is too high. These Corona/Recession situation will cause Trouble on the company to pay back the Loan & Interest. This will gain lead to Pledging of Shares & Causing Chaos!
- Promoters sold 17% of their holding is the past boom. This denotes that they ditched the Investors & Booked Profits.
- Overall the Reputation of Leader, Brand Recognition are in trouble.
From the above it is obvious that the company is in Deep Trouble now. I would say to Stay away from this counter!
If you are already an Investor you can continuously hold as it crashed heavily!
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