Avon Corporation
Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=3014
Printed Date: 21/Apr/2025 at 3:11pm
Topic: Avon Corporation
Posted By: suresht
Subject: Avon Corporation
Date Posted: 04/Oct/2010 at 9:11pm
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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.
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. |
Replies:
Posted By: Khan
Date Posted: 04/Oct/2010 at 10:24am
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The company has negative cash flows and is diluting equity for past years. ------------- If you do what you've always done, you'll get what you've always gotten |
Posted By: LearningToFly
Date Posted: 05/Oct/2010 at 12:03pm
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As Karn already said, the cashflow is negative for last few years though revenue and profit growth is outstanding. ------------- Success... at all cost. |
Posted By: aniljain
Date Posted: 05/Oct/2010 at 12:34pm
------------- Investment is an art, not science |
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Posted By: aniljain
Date Posted: 05/Oct/2010 at 1:02pm
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http://www.indiainfoline.com/Research/LeaderSpeak/Pankaj-Saraiya-Managing-Director-Avon-Corporation-Ltd/10390072 -
interview of pankaj saraiya m.d. by india infoline
http://www.indiainfoline.com/Research/LeaderSpeak/Pankaj-Saraiya-Managing-Director-Avon-Corporation-Ltd/10390072 ------------- Investment is an art, not science |
Posted By: suresht
Date Posted: 05/Oct/2010 at 3:17pm
| You are right about the negative cash flow. But I think its because of greater working capital requirement as sales jump from 50 crores in 2008 to 116 crores in 2010. As far as equity dilution is concerned, it happened last year only due to huge capex requirement. Additionally, with 35 crores of cash in hand, I dont think company will need to further dilute its equity. |
Posted By: rajnair
Date Posted: 05/Oct/2010 at 4:59pm
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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. |
Posted By: LearningToFly
Date Posted: 05/Oct/2010 at 5:05pm
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Suresh
Even if we do not consider capex and increase in working capital, the operating cashflow is still negative. All other parameters are too good.
Have you seen their weighing machine being used in any shop or Gym? I did not see any. ------------- Success... at all cost. |
Posted By: sureshbazi
Date Posted: 05/Oct/2010 at 12:23pm
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There are two negatives for the company as i have seen. 1) Promotor holding is just 11% or so.
2) Dont know why they Advertise so much in CNBC about there Annual and qtrly results, it makes suspicious and it is waste of invester money. ------------- 'It is only when you combine sound intellect with emotional discipline that you get rational behavior.' – WB. |
Posted By: j2eeprofessiona
Date Posted: 05/Oct/2010 at 10:43am
within one year they diluted the equity so much...dont u think something amiss here.. and the promoters stake is so low...by the way when i was an investor i asked them would they further dilute the equity and they said they might if they want money for more expansion. secondly they couldnt answer my question as why was debt not taken..why not a combination of debt-equity... again no answer... this company is not professional it seems and i am unable to see any of their products unfortunately.. where's the money coming frrom? |
Posted By: Khan
Date Posted: 05/Oct/2010 at 11:03am
Another sign of being unprofessional comes from the restatement of accounts for quarter end March.. they made adjustments and increased EPS when the final annual accounts were released. ------------- If you do what you've always done, you'll get what you've always gotten |
Posted By: aniljain
Date Posted: 05/Oct/2010 at 11:47am
Smell somthing cooking on financial book  ------------- Investment is an art, not science |
Posted By: sajit
Date Posted: 10/Nov/2010 at 8:21pm
| this is trading on the upper circuit for the last 2 days. Any idea what is brewing here? |
Posted By: Ansh
Date Posted: 11/Nov/2010 at 9:11pm
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Bulk deal in the counter today - CREDIT SUISSE FIRST BOSTON (SINGAPORE) - has bought 1.64 Million Shares at a price of Rs 9.29 today.
Will this be a multibagger????
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Posted By: kushal.masand
Date Posted: 19/Jan/2011 at 12:17pm
| i wud like to sit outside the bounndary and watch..... |
Posted By: suru27
Date Posted: 20/Jan/2011 at 3:53pm
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Even i saw this stocks after running few screeers..Spoke to a friend working in one of the leading weighing machine company called metaller tollerado(one of worl's best).. few things to share: 1. Indian companies r running commodity type business.. what MT sells at 1 lakh, there are thousands of indian manufacturers selling weighing machine of same type in 5k-10k , obviously of much cheaper quality
2. there is no moat in indian companies including this.. he did nt even knew name of this company
There is huge equity dilution year by year..though it becomes a multi bagger, i would love to stay aside...from gambling point of view for such stocks i ve 2% of my portfolio..can allocate .2-.3% of my portfolio forgetting the money..
Not an investment bet...
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Posted By: subu76
Date Posted: 20/Jan/2011 at 7:08pm
this does not mean a thing... Please note this deal is does not mean that CSFB is betting on the company...it is extremely likely to be an acquisition for a client
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