Description
It also gives the industry analysis of consumer durable industry. It gives financial analysis, valuation and du point analysis of Hawkins Cooker Ltd.
Hawkins Cooker Ltd
By “Pricing Power “
What is the business all about
? Hawkins Cookers is a manufacturer of pressure ? ? ?
?
cookers and cookwares incorporated in 1959 Hawkins Cookers manufactures domestic pressure cookers and cookware It manufactures under different brand names of Hawkins, Futura, Contura and Ventura. The company is the largest cookware manufacturer in India and exports its products to more than 60 countries. Its major markets for cookers are in north and east India
Positive factors for the company
? Pricing Power ? Rising disposable income of ? ? ?
? ? ? ? ?
population Shift from joint to nuclear families Growth in population Low penetration of pressure cookers in rural market presents a huge opportunity Safety of the products Brand value New wedding couples Implementation of GST Low penetration of PNG/LPG in India
Industry structure and dynamics
Consumer durables are the products whose life expectancy is at least 3 years. These products are hard goods that cannot be used up at once. Market divided into two segments inner fitting lid and outer fitting lid.Hawkins is a leader in inner fitting lid Due to changing lifestyle growth in non stick cookware segment The pressure cooker industry, which has a penetration of mere 30-35% in India offers a lot of scope with increase penetration of LPG. Alongwith TTK prestige it holds around 60% market share of the Indian pressure cooker market Competition from cheap imports from Singapore, China and other asian countries.
hawkin
Low entry barrier
What can kill the company
? Rising commodity cost ? Losing market share to ?
?
? ? ? ?
unorganized players Pressure cookers contribute to over 80% of Hawkins topline. Any downturn in the industry can cause the sales to drop substantially. Cheap imports from China, Singapore and other Asian countries Fluctuations in exchange rates Long life of the products Competition from local players Hit on the brand value
Important questions to be asked
? Why is the dividend high?
? Why has the capacity been low?
? Where is the company spending 7-8 cr of capex
every year when its capacity utilization is low? ? Why not diversify into complimentary kitchenware segment when you have surplus cash? ? Whats is the valuation of the land holding?
Financials
Important financial ratios
2010 Debt-Equity Ratio Debtors Interest Cover Ratio PBIDTM (%) PBITM (%) PBDTM (%) CPM (%) APATM (%) ROCE (%) RONW (%) 0.32 2009 0.36 2008 0.51 2007 0.86 2006 1.39 2005 1.94 8.7 2.05 6.24 5 3.8 3.7 2.46
10.81 10.65 10.33 10.43 10.63 33.68 22.43 20.07 12.72 19.49 12.07 19.49 12.18 13.04 12.47 8.16 7.51 13.2 9.58 8.86 8.91 5.9 5.18 7.66 8.09 7.26 7.15 4.89 4.06 3.88 6.58 5.54 5.15 3.82 2.78
132.85 96.74 69.45 47.84 25.89 18.13 112.25 81.85 61.45 49.67 31.01 26.27
Inflection point
12.0% 10.0% 8.0%
adv/sales
? In 2006, there was a
6.0% 4.0% 2.0% 0.0% adv/sales
change in management with Subhadip Dutta being promoted as vice chairman and CEO of the company ? This proved to be a turning point for the company with profits rising multifold while advertising costs as a %age of revenue coming
40 35 30
Reported Net Profit
25
20 15 10 5 0 -5 Reported Net Profit
-10
Capacity utilizations
Year Unit of Measurement % of STO Capacity Utilised -% No 81.37 38.49 2010 No 80.58 31.5 2009 No 80.53 28.35 2008 No 80.56 24.77 2007 No 80.07 19.57 2006 No 82.92 21.58 2005
Dupont Analysis
Mar-06 Mar-07 Mar-08 Mar-09 Mar-10
Net Earnings margin Capital Turnover
2.8%
4.1%
5.2%
7.5%
12.4%
5.098458 6.725255
7.78472 7.187218 5.784486
Return on Capital Employed
14.1%
27.3%
40.2%
53.8%
72.0%
Valuation
Market Capitalization Current Debt As of March 2010 Total Debt Capacity 542 Cr 12.27 65.64444
Average Cash No of Share outstanding Minimum Price Per Share
(Debt+Market Cap)/Debt CFO/Interest(Avg)
12.45 0.529 Cr 147.625
45.17278 10.58781
Historical Price Movement
?Thank You
doc_900641118.pptx
It also gives the industry analysis of consumer durable industry. It gives financial analysis, valuation and du point analysis of Hawkins Cooker Ltd.
Hawkins Cooker Ltd
By “Pricing Power “
What is the business all about
? Hawkins Cookers is a manufacturer of pressure ? ? ?
?
cookers and cookwares incorporated in 1959 Hawkins Cookers manufactures domestic pressure cookers and cookware It manufactures under different brand names of Hawkins, Futura, Contura and Ventura. The company is the largest cookware manufacturer in India and exports its products to more than 60 countries. Its major markets for cookers are in north and east India
Positive factors for the company
? Pricing Power ? Rising disposable income of ? ? ?
? ? ? ? ?
population Shift from joint to nuclear families Growth in population Low penetration of pressure cookers in rural market presents a huge opportunity Safety of the products Brand value New wedding couples Implementation of GST Low penetration of PNG/LPG in India
Industry structure and dynamics
Consumer durables are the products whose life expectancy is at least 3 years. These products are hard goods that cannot be used up at once. Market divided into two segments inner fitting lid and outer fitting lid.Hawkins is a leader in inner fitting lid Due to changing lifestyle growth in non stick cookware segment The pressure cooker industry, which has a penetration of mere 30-35% in India offers a lot of scope with increase penetration of LPG. Alongwith TTK prestige it holds around 60% market share of the Indian pressure cooker market Competition from cheap imports from Singapore, China and other asian countries.
hawkin
Low entry barrier
What can kill the company
? Rising commodity cost ? Losing market share to ?
?
? ? ? ?
unorganized players Pressure cookers contribute to over 80% of Hawkins topline. Any downturn in the industry can cause the sales to drop substantially. Cheap imports from China, Singapore and other Asian countries Fluctuations in exchange rates Long life of the products Competition from local players Hit on the brand value
Important questions to be asked
? Why is the dividend high?
? Why has the capacity been low?
? Where is the company spending 7-8 cr of capex
every year when its capacity utilization is low? ? Why not diversify into complimentary kitchenware segment when you have surplus cash? ? Whats is the valuation of the land holding?
Financials
Important financial ratios
2010 Debt-Equity Ratio Debtors Interest Cover Ratio PBIDTM (%) PBITM (%) PBDTM (%) CPM (%) APATM (%) ROCE (%) RONW (%) 0.32 2009 0.36 2008 0.51 2007 0.86 2006 1.39 2005 1.94 8.7 2.05 6.24 5 3.8 3.7 2.46
10.81 10.65 10.33 10.43 10.63 33.68 22.43 20.07 12.72 19.49 12.07 19.49 12.18 13.04 12.47 8.16 7.51 13.2 9.58 8.86 8.91 5.9 5.18 7.66 8.09 7.26 7.15 4.89 4.06 3.88 6.58 5.54 5.15 3.82 2.78
132.85 96.74 69.45 47.84 25.89 18.13 112.25 81.85 61.45 49.67 31.01 26.27
Inflection point
12.0% 10.0% 8.0%
adv/sales
? In 2006, there was a
6.0% 4.0% 2.0% 0.0% adv/sales
change in management with Subhadip Dutta being promoted as vice chairman and CEO of the company ? This proved to be a turning point for the company with profits rising multifold while advertising costs as a %age of revenue coming
40 35 30
Reported Net Profit
25
20 15 10 5 0 -5 Reported Net Profit
-10
Capacity utilizations
Year Unit of Measurement % of STO Capacity Utilised -% No 81.37 38.49 2010 No 80.58 31.5 2009 No 80.53 28.35 2008 No 80.56 24.77 2007 No 80.07 19.57 2006 No 82.92 21.58 2005
Dupont Analysis
Mar-06 Mar-07 Mar-08 Mar-09 Mar-10
Net Earnings margin Capital Turnover
2.8%
4.1%
5.2%
7.5%
12.4%
5.098458 6.725255
7.78472 7.187218 5.784486
Return on Capital Employed
14.1%
27.3%
40.2%
53.8%
72.0%
Valuation
Market Capitalization Current Debt As of March 2010 Total Debt Capacity 542 Cr 12.27 65.64444
Average Cash No of Share outstanding Minimum Price Per Share
(Debt+Market Cap)/Debt CFO/Interest(Avg)
12.45 0.529 Cr 147.625
45.17278 10.58781
Historical Price Movement
?Thank You
doc_900641118.pptx