Is Bella Casa a Multibagger Stock based on Warren Buffet Analysis?

Bella Casa Fashion & Retail Ltd

NSE Code BELLACASA.NS
BSE Code 539399
URL http://www.bellacasa.in/
CMP 122
Free Report Yes
Publish Date Sep-30-2019

In this post we would like to Explore the Multibagger Stock Potential of Bella Casa.

bella casa

Bella Casa Fashion & Retail Ltd is operating in fast growing fashion market of India. Bella Casa is catering to 2 lakh cr market. The market size of home furnishings, women ethnic wear and men’s ethnic wear is more than Rs 2 lacs cr.

Positive Factors

Company have consistent 15% Revenue & Profit growth in past 3 years.

bella-income-statement

Company is quoting at Low PE of 15 due to current market sentiments

Company is trading at 40% discount from 52 week high due to market sentiments, GST troubles etc.

Company is poised for long term growth advantages due to Structural Tax changes & India growth story.

Company has more than 4000 retail outlets in india & expanding through branding, innovation, e-commerce & deep penetration.

India is 2nd largest exporter of home textiles & hold 7% global share. The India home decor consumption is growing at CAGR 8% due to real estate trends, millenial disposable income etc. which will support the company growth in future too.

Company had Expanded Capacity activation in current financial year.

Concern Factors

Current Quarter EPS growth is low due to GST & Tax Impacts.  This is measured to be recovering in upcoming years.

Global Recession can impact the Sales in near future.  But long term seems to be okay.

FDI Participation, Increased Competition from Global Brands, Government policies are Other Threats in the path of the company

Warren Buffet, Value & Growth Checklist

Following are the Checklist parameters:

Capitalization 140 Crore green
History of Consistently Increasing Sales, Earnings & Cash Flow Yes. green
Durable Competitive Advantage Yes. green
Future Growth Drivers / Sector Growth Yes. green
Conservative Debt (long term debt < 3 Net Profit) No, company have higher debt red
Debt Equity Ratio, Current Ratio Debt Equity Ratio is 1 (this is bad for growth)

Current Ratio is 4 ( no liquidity crunch)

red
Return on Equity must be Above Average 21% (Good) green
Low CAPEX required to maintain current operations No yellow
Inventory Turnover Ratio, Debtor Days, ROCE Moderate, High Debtor Days yellow
Management is holding / buying the stock Management sold 5% red
Market Price < Intrinsic Value Yes. Intrinsic Value at Rs. 250 Intrinsic Value Calculator green
Stock Price is consolidating (now) Yes green
Stock Price is growing in past years along with EPS growth Yes. green
Consolidated PE, PB Ratio, PEG Ratio Okay yellow
Cash Flow Positive, Net Profit % greater than 8% Cash Flow: Negative

Net Profit: No

yellow
Paying Dividends, Tax Yes green
EPS Growth Rate 15% above green
Jump in Trailing Result EPS Yes green
Jump in Quarterly Result EPS Yes green
Expected Gain in 5 Years 300-500% green
Price Movement Graph, 52 Week High & Low Okay green
Volume Analysis 82 (good for existing investors, bad for new investors) yellow
Power of Brand Yes, Company has good Brand & Ambassador Jacqueline Fernandez green
Corporate Governance, Reputation of Leaders Yes green
Fraud reported No.  But high remuneration ration & increments for core promoters green

Summary

Based on the above analysis I would like to declare that the Bella Casa possess Multibagger Stock in Indian Stock Market & One can Invest during 2019 year.  Company aligns with Warren Buffet principles of Value & Growth Investing.  It  can be considered as Low Risk Moderate Returns investment.

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Disclaimer Futurecaps is an independent equity research team. Use of the information herein is at Investor’s own risk. This is not an offer to sell or solicitation to buy any securities and Futurecaps will not be liable for any losses incurred for the investment based on the advice.  The Investor is advised to do due diligence in the scrip mentioned.  None of Futurecaps Advisors hold 1% above Holdings of this company.

 

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