How long investor fraternity can ignore a company which is showing continuous growth in past ten years with uninterrupted dividend paying history and led by decent management ? .Answers may vary ,but one thing is sure – if history is any indication , once investors will find it out which will result in sharp re-rating of stock price.The company in question is Superhouse Ltd which I recommended earlier @ Rs.62 few years back and even after reporting robust performance in business thereafter, it is still trading at cheap valuation.
Rs.600 crore Superhouse is the second largest exporter of Leather footwear and other leather products from India .Its products are exporting to countries like France, UK, Germany, USA, Canada, Spain, Scandinavia, Netherlands ..etc under its own brand “ Allen Cooper” and supplying to various companies like Topman,Barrats,Next,Ikon,Bata,Hush Puppies ,Pierre Cardin,C&A,Eram,Andre, Dorothy Perkins, Nilson Group, Acebo’s..etc.In the safety shoe segment company exporting products under own brand “Double Duty” to Gulf countries and European countries.More than 80% of company’s turnover is presently from export and only now company seriously exploring the opportunities in domestic market with their “Allen Cooper “ brand. (Product offering in India can access HERE) Superhouse group having 15 manufacturing facilities in India and marketing offices in UK, U.S.A., U.A.E. Canada,and Romania..etc .With the vast experience of promoters in this field ,Superhouse showing excellent growth in past many years.
On Valuation basis Superhouse is one of the cheapest quality stock available .Company reported a top line of Rs.592 cr and a net profit of Rs.23 Cr in last financial year. Company reported sharp improvement in its performance in the first half of current FY where it reported a sales of Rs.325 Cr and a net profit of Rs.15.5 Cr .Company reported an EPS of Rs.14 in the first half itself v/s Rs.9 reported same period in last year. Export oriented sectors are expected to perform well in coming years due to improvements of economies of Western countries. Since, company earning lion share of its income from overseas market ,any improvement in US and EU countries will help Superhouse to perform exceedingly well going forward .I expect superhouse can report an EPS close to Rs.30 in this full year.At current market price of Rs.100 ,it is trading even way below its consolidated book value of Rs.162 !!.Even if investors ignored this stock so far ,promoters are confident about their company and hiked their own stake in the company sharply ( from 45% to 55%) during last 5 years.I believe ,this is the perfect time to look into this stock due to a special reason too. As per the relaxed Periodic Call Auction guidelines Superhouse is eligible to come out of PCA .This is expected to happen within next 10 trading sessions.
Considering promoters experience,continuous growth in business,very cheap valuation,brightening export opportunities – recommending Superhouse again at CMP of Rs.100 .After the announcement of relaxation in PCA, like many other such stocks, Superhouse also recovered in past few days .But considering its one year forward P/E of less than 4 even at CMP ,I believe there is very good chance of further upside even from current level.
Stock listed only in BSE with trade code 523283
# Since this stock is currently trading in PCA ,order entry is permitted only from 9.30 AM.
Stock listed only in BSE with trade code 523283
# Since this stock is currently trading in PCA ,order entry is permitted only from 9.30 AM.
