Asahi Songwon Colors POTENTIAL MULTIBAGGER STOCK D30M01Y2017

Asahi Songwon Colors is in the business of speciality chemicals. This Gujarat based company is engaged in the manufacturing of phthalocyanine pigments comprising of CPC blue and a range of beta blue pigments.
For more info check, http://www.asahisongwon.com/       

NUMBERS - THE LATEST         
Market cap: 312 crores                   CMP on Day30 Jan2017: Rs 256                BV: 120
Revenue FY16: 224 cr                     Net profit FY16: 21 crore approx                FV: 10     

POSITIVES 
1. Around 80% of the company revenues comes from exports. Some of their top clients are DIC, Japan; Sun Chemicals, USA and Clariant Chemicals.
2. Operating margin has gone up from 10.8% in FY13 to 17.6% in FY16. In the same time D/E ratio has come down from 0.59 to 0.33
3. Excellent results in Q2FY2017 results with sales of 68 crore and net profit of 7 CR.
4. By de-bottlenecking of operating capacity, the company plans to increase production from 750 to 850 tonnes per month.

INTERESTING INFO  
1. Company has introduced 2 new products; Beta Blue 15.4 and Alpha Blue. These could help in improving the margins going forward
2. They have around 25 crores in cash and corpus which eases possibility of future expansion.
3. AksharChem, a similar company, which was demerged from Asahi Songwon, moved up from 150 to 750 in one year backed by excellent results. So Asahi Songwon doubling from current levels should not be a surprise :-)
4. DIC Corp and Clariant have been long term stake holders in the company. 

NEGATIVES - POSSIBLE RISKS 
1. Extremely difficult to find negatives in this company :-) 

MY TAKE 
Asahi Songwon Colors is a high quality company. Excellent management pedigree, niche products, proven track record with a business that has global scope in terms of growth. Almost an ideal company. Management has undertaken a host of initiatives that will show in the future results.

Several companies that are into specialty chemicals have proven to be great wealth creators over the last couple of years. Most of the good quality ones are trading at 4 to 6 times book. Asahi Songwon has all the attributes of a high quality company, however, which is available at around 2 times book. So this comes in the category of a great business at a reasonable price.

Asahi Songwon is a high probability potential multibagger. It is just a matter of patience!! 


Disclosure: I own shares in Asahi Songwon  


For commercial collaboration, consultation and JV ideas;
                                                you can contact me via zorbayogi9@gmail.com      


Important Note: Potential multibaggers are those stocks which have potential to give 100 - 500% profits. Obviously such returns take time. Probably 2 - 3 years or more. Short term volatality is the reality of the stock market and that will always happen. Short term movements(upside and downside) are impossible to predict. Only invest funds that you will not need for the next 3 - 4 years. As long as you buy a stock for the right reason and are convinced about the future prospects of the company, there is no need to worry if the share price goes down and stays down for a period of time after you buy; provided you have followed the cardinal stock market mantra BUY LOW.  

Very important note: The objective of this blog is to share knowledge and info about multibagger ideas/opportunities. Neither is this trading website nor an analyst website nor a Buy/Sell call website. For stock market success, always do your home work, own assessment and make your own decisions.