HAWKINS,the next BILLION maker

HAWKINS is very common name among food lovers like me. But now it becomes more common among investors. But there is question, what does make it so popular among investors than the food lovers community? Simply answer, it’s return. It's making new life time high and it has appreciated by almost 6 times from it’s 52 weeks low where as stock like Reliance industry has appreciated by almost 2 times from its 52 weeks low and NIFTY had become double. But again there is a question “Can an Investor take long view at this current level?” Simply answer is “yes”. There are some fundamental factors available which gives an edge over its traditional and nearest competitor TTK Prestige for long term investment. Factors are:-

· The Company has low capacity utilization with utilization of 31.5% in FY2009 and an average utilization of 25% in the last 5 years. No future capital expenses are required to fuel expansion for Hawkins in Pressure Cooker segment. It can very well increase its capacity utilization with the increase in demand.

• The company has been maintaining a very healthy return on Equity from the last 5 years. Its ROE has grown from 26.2% in 2005 to 81.8% in the year 2009.

• The company has paid 200% and EPS is Rs.36.15 for the FY2009 where as Prestige paid 55% with EPS of Rs. 19.72

Apart from the above discussion there is another factor which makes this sector lucrative to investors. Factor is:-

The Size of Pressure Cooker industry in India is projected at INR6.50 Bn and cookware is projected as Rs.1,500 Mn. Another Big potential, Modular Kitchen Market size is expected to around INR10 Bn. Overall, the entire kitchenware industry is worth about INR38 Bn. The pressure cooker industry has been growing at a rate of 10% YOY for last 5 years. It suffers from low entry barriers. As a result, the market has regional and unorganized players along with national companies like

Hawkins and TTK Prestige, which commands over 50% share in the domestic pressure cooker market. There are about 250 brands of pressure cookers in the market. According to industry sources, 90% of urban India already owns a pressure cooker whilst barely 22% of rural India owns a pressure cooker.

The demand from urban India will be predominantly from upgrading whereas additional pressure cookers and emergence of new households is the great opportunity in rural India. The growth in demand for domestic home appliance products especially, the kitchenware production continues to rise in tandem with the increase in income and living standards of the people both in the urban and rural areas of the country. The growth rate of the industry is likely to be around the 14% mark in the coming years.

With Some good things, there are some risks associated with this stocks which need to consider before investing in HAWKINS.

Key Risks

Saturation of market: The growth rate of the industry is dependent on the ability of players to tap the rural market. However if this does not materialize then the industry may experience a flat sales growth rate.

Non-Diversified Business: Pressure cookers contribute to over 80% of Hawkins top line. Any downturn in the industry can cause the sales to drop substantially.

In spite of this risks associated with HAWKINS. One may take long term view. Because investing in capital market is “ZERO SUM GAME”

ANIMATION FILM MAKER VS NON-ANIMATION FLIM MAKER

AVATAAR, the biggest hit of 2009 is known as 3D animation effect in the movie which made a history and has opened a new era for 3D animation industry. But we have forgotten that prior to this film. Amir Khan started using animation in bollywood film.

From an investor point of view, it is a new way to make money by investing money in animation film Maker Company like CREST ANIMATION. If we carefully study the fundamental factors, it will be realised that animation film Producer Company have edge over the non-animated film makers. What are the factors:-

• Basically you are becoming film producer for lifelong and you need not to pay for HERO`S SALARY OR HEROINES EXPENDITURE. You have your own stars working at your order. Thus earning will remain more and more visible and expenditure will be less.

• As a Producer you don’t need to spend money for ART Decoration which is accounted for2-3% of total cost for film like JODHA AKBER.

• You don’t need to go outdoor shooting.

Therefore for from the above discussion we can say, it makes sense to invest in animation film maker companies.

Later we will discuss some stocks in animation flim making industry..........