Ram Ratna Wires is a leading manufacturer of winding wires used in heavy electrical equipment. Starting out as a small electrical shop, this company has transformed into RR Shramik, the leading supplier of copper wires used in transformers, switch-gears, transmission lines, capacitors, etc
For more info check, http://www.rrshramik.com/
(there is also an old website for the entire group)
NUMBERS - THE LATEST
Market cap: 178 crores CMP on Day14 Jan2017: Rs 81 BV: 36
Revenue FY16: 720 cr Net profit FY16: 9 cr approx FV: 10
POSITIVES
1. As winding wires is one of the primary inputs to electrical equipments and machines, Ram Ratna is set for good future growth with increased government emphasis on infrastructure
2. Since last 3 quarters the company has done a net profit of 4+ crores. That too on the back of a sluggish year. There is quite good scope that annual EPS for the current FY could well double compare to last FY.
3. Though the last year balance sheet indicates a debt of 100+ crores, long term debt here stands at only 12 - 15% of that. Rest all could be working capital.
4. Crisil has upgraded the company's bank limit rating from BBB- to A3
5. RRW has been declaring dividend since last 6 - 7 years without fail
INTERESTING INFO
1. Company Management has indicated their global aspirations. The new website (rrshramik) streamlined on the RRW business, rather than the entire group, clearly shows their focus and intent. The design and strcuture of the website is surely geared towards international markets. Forex earned last year was only around 50 crores. There could be huge scope to grow and expand this business.
2. The company has an extensive product line comprising of 16 products falling into 5 groups. Details in the website.
3. Promoters of Ram Ratna Wires own 73% of the company. Another 10% is owned by anchor investors. So only 17% is owned by around 4000 shareholders.
4. RRW website homepage headline is,
Quality: Stemming from our dedication to give you a superlative experience in electrical technology.
This indicates the positive mindset of the management :-)
NEGATIVES - POSSIBLE RISKS
1. Delay in infra spending by the government
2. Apart from that, there is nothing much that I can think of :-)
MY TAKE
Ram Ratna Wires has all the attributes of a potential multibagger. Good quality company with a wide range of niche products having a proven and capable management, with concrete vision for future growth and expansion.
There is a high degree of probability that there will be huge infrastructure spend in India over the next 1 - 2 years, including the electrical industry under a dynamic and result-oriented power minister. This could directly become a substantial tailwind for RRW.
All one needs to do it buy the shares, and sit on them tightly for few years. Making excellent profits here is highly probable.
RRW is an obvious potential multibagger!!
Disclosure: I own shares in Ram Ratna
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.
For more info check, http://www.rrshramik.com/
(there is also an old website for the entire group)
NUMBERS - THE LATEST
Market cap: 178 crores CMP on Day14 Jan2017: Rs 81 BV: 36
Revenue FY16: 720 cr Net profit FY16: 9 cr approx FV: 10
POSITIVES
1. As winding wires is one of the primary inputs to electrical equipments and machines, Ram Ratna is set for good future growth with increased government emphasis on infrastructure
2. Since last 3 quarters the company has done a net profit of 4+ crores. That too on the back of a sluggish year. There is quite good scope that annual EPS for the current FY could well double compare to last FY.
3. Though the last year balance sheet indicates a debt of 100+ crores, long term debt here stands at only 12 - 15% of that. Rest all could be working capital.
4. Crisil has upgraded the company's bank limit rating from BBB- to A3
5. RRW has been declaring dividend since last 6 - 7 years without fail
INTERESTING INFO
1. Company Management has indicated their global aspirations. The new website (rrshramik) streamlined on the RRW business, rather than the entire group, clearly shows their focus and intent. The design and strcuture of the website is surely geared towards international markets. Forex earned last year was only around 50 crores. There could be huge scope to grow and expand this business.
2. The company has an extensive product line comprising of 16 products falling into 5 groups. Details in the website.
3. Promoters of Ram Ratna Wires own 73% of the company. Another 10% is owned by anchor investors. So only 17% is owned by around 4000 shareholders.
4. RRW website homepage headline is,
Quality: Stemming from our dedication to give you a superlative experience in electrical technology.
This indicates the positive mindset of the management :-)
NEGATIVES - POSSIBLE RISKS
1. Delay in infra spending by the government
2. Apart from that, there is nothing much that I can think of :-)
MY TAKE
Ram Ratna Wires has all the attributes of a potential multibagger. Good quality company with a wide range of niche products having a proven and capable management, with concrete vision for future growth and expansion.
There is a high degree of probability that there will be huge infrastructure spend in India over the next 1 - 2 years, including the electrical industry under a dynamic and result-oriented power minister. This could directly become a substantial tailwind for RRW.
All one needs to do it buy the shares, and sit on them tightly for few years. Making excellent profits here is highly probable.
RRW is an obvious potential multibagger!!
Disclosure: I own shares in Ram Ratna
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.
Dear Sir, RRW NPM is quiet low, considering that how they will be able to service their growing debt in future?
ReplyDeleteDear Philip,
DeleteLong term debt of the company is very low. Short term debt keeps fluctuating q-o-q and company has been able to quite comfortably service it.
Moreover, there does not seem any need of an significant capacity expansion in the near future.
Also, the credit rating has improved. Which means, interest will reduce. If you observe last 6 quarters, profit margin is increasing and interest on debt is reducing.
Company is in the right direction :-)
Wish you good profits in 2017!
Sir, if 100 cr short term debt is working capital then with a yearly profit of 9cr (+ ) in future, the net possible debt reduction will be proportional to this net profit (max). So in near future they will continue to have high interest expense with regular minor reduction.So their future purely depends on their sales growth. Is there any chance that their interest reduction in quaterly report is influenced by drop in inerest rate?
DeleteI am not a very experienced stock inverstor, so my qusetions may look bit silly.
Hello Yogi.
ReplyDeleteI found something very intresting about Ram Ratna.
Finance Leverage of 1.86
HYFY17 NP MARGIN 2.3 % VS 1.86 In FY 16. This is mainly due to drop in Finance Cost by 22 Percent.
HYFY16 Intrest Outgo was around 13.5 Cr. Which came down to 10 Cr.
Operational Leverage is also towards north.
So Due to both Combined Leverage will help Improve margins going forward.
So Even they Improve the margins to 3 Percent they will make a profit of 30 Cr.. So 400-450 Cr Mcap Easily Possible..
If u see their advertisements they are promoting this brand agressively. This could be proxy of Vguard Industries.
Absolutely, Suyog.
DeleteWhenever a company is increasing gross profit margin, and reducing finance cost, it is in a great zone.
And RRW is exactly there. So we should not be surprised if the stock continues making new highs.
However, im not too sure if this belongs to the same category as V-guard.
cheers!
Hello Yogi,
DeleteAs per the expectations Margins have improved drastically from 2.3 Percent to 3.4 Percent. Logic on Financial Leverage being 1.86 Working well. Moreover with this improved margins this Company can post a Annual Profit of 28-30Crores on Stable sales of 900 Crores Coming Fiscal.So on 2.2 CR Shares EPS Would be around 13-14 So I would give this Company a PE of 15-18 Because of Brand RR Kabel and it's Brand Recall. With 13-14 Rs EPS on 15-18 PE Stock Should Trade at 200-250 in 1 Year.
FY 17 EPS will be 9.5-10 So Stock Should Trade atleast 140-150 In near Term. Say after Results. Looks Good for 20 Percent kind of Quick Trade also.
Dear yogi
ReplyDeleteUr view on sankaya infotek cybermate Gss and bhartia global will buy at cmp
No clue, Amudhan.
DeleteI have not heard of any of these stocks.
However;
If you have any specific stock where you can think of atleast 4 - 5 reasons why it will become a multibagger, then i can take a look.
Otherwise I always stick a limited number of stocks at any point in time. Max of 4 - 5
Cheers!
Hi Yogi Sir,
DeleteAre you tracking Ducon Infratech, Gennex Lab & GTL Ifra
In my view these are the Multibaggers in waiting.
Ducon for Amalgamation, Gennex new USFDA Plant & GTL Infra (Tower Business boom in India)
Please have a look if possible.
Special thanks to yogi sir for recommending palred & pondy..both hitting UC today..
ReplyDeleteWil buy ram ratna below 90 levels..
Very good results, stock is flying...thanks to yogi sir...
DeleteMy dear stock guru
ReplyDeleteUr view on bhariya global already hit new high
Sir can u share ur views on Shree Pushkar and Omkar Speciality pls. Thanks
ReplyDeleteIf you’re looking for expert stock recommendations for medium to long term investments in the stock marketyou’re on the right page.
ReplyDeletestallion asset