A pen manufacturer wants to challenge Doms industry

Era of 2000s where companies were getting made on few SKUs and making them hit in market. The race in the market is taking market share from unorganized sector and that's leading them to growth 24 years has gone, market share of most of the companies are stable. This making them grow slower. Now they are looking new growth engines Pen manufacturer turned to stationary and then to creative proucts for children's and now to steel bottel business. Cello and doms industries are really made good companies out of this But looking valuation wise they are far ahead of ours risk taking capacity. Cello still feels near to fair value but Doms valuation is risky Flair writing is the company we can get comfortable and growth seems to be ahead. P Business segment:- Pen- 79 % Creative segment:- 11-12% Steel bottle: 7-9% Pen business in India growing at rate of 4-5% but export are really bad due supply chain disruption after covid. We can see same things in agro chem companies like meghmani as export are not picking up they are making losses. Revenue:- 2022- 577 cr - 55 cr profits 2023- 942 - 117 2024- 979 - 118 Last 1 year growth is muted. They decided to get into creative segment and steel bottle to increase revenue. Good thing about these products is their margins are superior to pen segment. This year June- 247 cr( neutral growth) Sept- 270 cr ( 5.1% yoy revenue growth) If the company is growth is 5-6% what is the point in buying this company? Growth is getting hit due export and their creative segment has supply issues. Pen business has growth of 5-6 % in India market and last quarter they had negative growth in export pen business. But now things has changed export are picking up. Second thing for them is creative segment shown 10% growth in September quarter but demand of their products are better than this. They are unable supply in the market because they had some supply issue. Now the company looking set up in-house manufacturer of 75% of their item. This will reduce dependency and fuel the growth. Steel bottle segment: Last year they sold 12 cr steel bottle in whole year and same this year in first half only they sold 20 crores of steel bottles. Remarkable growth in this segment due to low base. Current margins in this segment are low because of fixed cost. As soon as revenue picks above certain levels fixed cost percentage goes down and margins improve. Like cello has same steel bottle but they sell it at 25% ebita margins What we are seeing is 4-6% growth in pen, 12-15% growth in creative segment and 150-200% growth in steel bottle. Management Guidance: Management maintains guidance for 11%-12% CAGR growth, expecting stronger performance in the second half of FY '25 . Confident in achieving targeted margins of 19%-20% through operational efficiencies and improved raw material costs Considering safest side 10% revenue growth and 19% ebita margins. Company going to have 1080 crores of revenue and 131 crore of profits this year. Next quarter is very crucial for them to look how they are going perform. If they manage to grow 4-5, % in pen and remarkable growth other segment then this stock will be next cello or Doms. What is most comfortable things in stock is Valuation, consistant profits and strong balance sheet. Valuation wise current market 2775 and profits are 118 crores. It means 24 PE multiple. That's far better than other players. Company margins are stable. Most of the time in range of 17-20%. That's making them to be profitable and generate good cash expansion. Company had cash of 180 crors DII increased stakes Number retailers are decrease from 84000 to 67000. It means shares are getting collected in few accounts. Promotors holding is 78.59%. They has to decrease below 75% as per rules of sebj but it's not going impact much. Try to have eye on this stock. Stock is in downward trajectory on charts. If we get this stock at 2400 crore market cap which is around 20 PE multiple then this will be best opportunity. Read as much as you can. Find right valuation and wait for quarterly results see how company going to perform.