Avon Corporation
Company is into manufacturing of weighing scale products. Low risk & stable revenue generating business. Competition is high but company has strong brand recall and features in the top three industry players. Strong y-o-y growth over the last five years. Company is expanding its plant in Baddi with 125 crore investment which will cut the production cost by 35% and is tax-free. Consistent dividend paying company. Company did a GDR issue of 48 crore ruppes at 10 ruppes in FY10.

(Lacs)	2010	2009	2008	2007	2006
Sales	11,663	7,359	4,947	3,910	2,236
Other income	149	448	106	57	107
PBIDT	1,663	1,071	539	404	200
Interest	377	236	252	173	45
PBDT	1,285	834	275	231	155
Dep	73	45	12	13	16
PBT	1,212	790	275	218	139
Tax	73	91	89	74	54
PAT	1,139	700	186	144	85

CMP - 5.56
M Cap - 36 crores
Shares outs - 6.5 crore (face value Rs. 10)

Invstment rationals
FY10 sales of 116 crores and profit of 11.39 crore put FY10 EPS at 1.75. At 5.56, its trading at a multiple of close to 3.2x. Dividend yield of close to 5% (0.30 dividend to be paid for FY10 between Oct 08-10). Stock is at 52 week low. for 1Q11, company reported 35 crore sales (40% y-o-y) ans 6.33 crore profit (100% y-o-y). Everthing about the company (business, financial, valuationa nd dividend) encourage me to keep on adding this stock in my portfolio for long term.

Let me know your views.


Edited by suresht - 04/Oct/2010 at 9:12pm

As Karn already said, the cashflow is negative for last few years though revenue and profit growth is outstanding.

interview of pankaj saraiya m.d. by india infoline

 

http://www.indiainfoline.com/Research/LeaderSpeak/Pankaj-Saraiya-Managing-Director-Avon-Corporation-Ltd/10390072

http://www.indiaprwire.com/pressrelease/machinery/2010042048511.htm

Avon Corporation Ltd.
Plans Investments of 125 Crores

Kolkata, West Bengal, April 20, 2010 /India PRwire/ -- Avon Corporation has excelled in manufacturing weighing scales for industries like jewellery, pharma, retail segments, consumer scales, fitness industries, hospitals, hotels, government institutions, and heavy industries. The demand for its products has increased to such an extinct that the Company plans to expand its production capacity by setting up a new plant in Baddi, Himachal Pradesh itself.

For the upcoming plant in Baddi, Himachal Pradesh Avon plans to invest around 125 crores and hopes to recoup the investment by generating higher and efficient production thus allowing Avon to derive higher profits.

Mr. Pankaj Saraiya, Managing Director, Avon Corporation Ltd commented "By setting up the new production facility Avon will have a cutting edge over its competitors in terms of pricing and quality. Since Baddi is a tax free zone with no income tax or excise it allows Avon to drastically reduce its production costs by 35%. Thus, lesser production costs allow Avon to charge competitive prices with far superior quality."

Avon Corporation Ltd managed to touch new heights in the weighing scale industry as they have introduced superior quality modern machines into the market and through their range of products catered to the masses.

Edited by rajnair - 05/Oct/2010 at 5:03pm