Company Description:
Hawkins Cooker Limited is engaged in the manufacturing, trading and selling of kitchenware. The products manufactured by the Company include pressure cookers, idly stands, cookware and others. It sells kitchenware under the brand names HAWKINS, FUTURA, MISSMARY
RESULT HIGHLIGHTS:
Hawkins declared its 2Q09 results on Saturday.
• The net sales for the quarter ended September 09 increased by 26% to Rs 76.23 cr from 60.74 cr.
• Its net profit increased by a robust 124% to Rs 10.11 cr as compared to Rs 4.51 cr, YoY
• Its EBIT margin increased by a strong 949 bps and this is mainly on account of a fall in its raw material costs as compared to sales from 34% to 25%, YoY
• Since the company is currently operating at only around 60% of its operating capacity, its increase in sales is not because of an increase in additional depreciation expenditure, which is also leading to margin expansions
• Company’s EPS grew by around 125% to Rs 19.1 from Rs. 4.51
At the current market price of Rs 522 the stock is currently trading at a trailing twelve month P/E of around 12, despite its earnings growing at an average of around 60%, over the last four quarters and good dividend payment track record and a dividend yield of over 4%
Hence, we maintain our BUY call on the stock with a year DDM based price target of Rs 625.

Company Description

Hawkins Cooker Limited is engaged in the manufacturing, trading and selling of kitchenware. The products manufactured by the Company include pressure cookers, idly stands, cookware and others. It sells kitchenware under the brand names HAWKINS, FUTURA, MISSMARY

Market Data as on 03.11.2009

LISTING

NSE/ BSE

MARKET CAP (Cr.)

Rs. 276.02

52-WEEK HIGH

Rs. 548

52-WEEK LOW

Rs. 155

BETA

0.55

CURRENT PE (x)

12.45

INDUSTRY PE (x)

n/a

PRICE PERFORMANCE (%)

Time Period

Stock

Nifty 50

1 MONTH

15.22

-7.26

3 MONTH

57.81

3.14

1 YEAR

267.8

63.4

FINANCIALS

hawkins financial results


RESULT HIGHLIGHTS:

  • Hawkins declared its 2Q09 results on Saturday.
  • The net sales for the quarter ended September 09 increased by 26% to Rs 76.23 cr from 60.74 cr.
  • Its net profit increased by a robust 124% to Rs 10.11 cr as compared to Rs 4.51 cr, YoY
  • Its EBIT margin increased by a strong 949 bps and this is mainly on account of a fall in its raw material costs as     compared to sales from 34% to 25%, YoY
  • Since the company is currently operating at only around 60% of its operating capacity, its increase in sales is not because of an increase in additional depreciation expenditure, which is also leading to margin expansions
  • Company’s EPS grew by around 125% to Rs 19.1 from Rs. 4.51

Investment Rationale

  • Well established brand name
  • The company has a low capacity utilisation being 31.5% in FY09 and an average utilisation of 25% in the last 5 years. Thus no future capex is required to fuel the growth in demand
  • With growing brand aspirations among people and rural development to fuel demand the requirements in this industry are bound to grow in the near future
  • The company has been maintaining a very healthy return on Equity from the last 5 years. Its ROE has grown from 26.2% in 2005 to 81.8% in the year 2009
  • Cookware industry has always been associated with a stable growth rate which has reflected in the share prices of the company over the years
  • The company has been growing the dividend payment every year and its dividend yield stands at around 4.8%
  • At the current market price of Rs 522 the stock is currently trading at a trailing twelve month P/E of around 12, despite its earnings growing at an average of around 60%, over the last four quarters and good dividend payment track record and a dividend yield of over 4%

Hence, we maintain our BUY call on the stock with a year DDM based price target of Rs 625.

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