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Vinyl Chemicals – Multibagger Analysis

Vinyl Chemicals – Multibagger Analysis

Vinyl Chemicals India Ltd , A Parekh Group company is in the business of selling various specialty chemicals mainly to textile, paints and adhesive sectors since 1991.

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Website: http://www.vinylchemicals.com/

CMP: 38

Warren Buffett Checklist

History of Consistently Increasing Sales, Earnings & Cash FlowYes.image
Durable Competitive Advantage

Yes. Company mainly sell product to Pidilite Industries.

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Future Growth DriversIncreasing market share of Pidilite should improve Vinyl Chemicals as well.image
Conservative Debt (long term debt < 3 Net Profit)Not.  The short term liabilities is very high for the company.  It is around 50 and the past year Net Profit comes only around 5 crore.image
Debt Equity RatioGood.image
Return on Equity must be Above AverageImpressive. 33%.image
Low CAPEX required to maintain current operationsHigh CAPEX required.image
Management is holding / buying the stock50% is management holding. They are holding flat for past 3 years.image
Price is Under Valued (< intrinsic value)Yes. Considering past 3 years earnings-growth.image
Stock Price is consolidating (now)Yes.image
Stock Price is growing in past years along with EPS growthYes.  Price grown 4 times in past 1-2 years.image

Additional Futurecaps Checklist

PE, PB RatioPE 4.2 which is good; PB 2.5 little higher in this capitalization range.image
Cash Flow Positive, Net Profit % greater than 8%Not.  Comes around 4%image
Paying Dividends, TaxYes.image
EPS Growth Rate20% to 50%image
Jump in Trailing ResultsYes. 100% jump in trailing year.image
Quarterly Results GrowingLatest quarter shows growth. Past quarter shows de-growth but.image
Expected Gain in 10 YearsMaximum 3-5 times in next 5 years.image
Volume AnalysisApt volume.image
Power of BrandCompany mainly work with Pidilite, hence brand does not matter in backward-integrations.image
Corporate Governance, Reputation of LeadersFlat.image
Fraud reportedFlat.image

 Declaration

We cannot really sure about declaring it as a Multibagger.  It could provide decent returns, but as we have other strong multibaggers, let us skip this.

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Allocation

0%

Disclaimer

Futurecaps recommends 20 to 25 multibaggers per year, we recommend a 25% to 50% allocation of your savings in equity.  The stocks recommended here are gone through Analysts of several years experience in stock market.  Although they were successful in predicting future multibaggers, the overall stock market is a risky game.  So we recommend the reader to put his/her own thoughts & invest wisely.

About Futurecaps

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

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