The company has got a very sticky business as no single customer account for more than 5% of the sales for the company. There are very few players in this industry and its very difficult to make entry into this business. Management seems to be very investor friendly as can be seen from the dividend payout ratio. The operating margins are continuously on an upward trajectory.
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Our January 2018 stock recommendation is a mid cap company which is trading at reasonable valuations compared to a lot of mid and small cap stocks. There is a general negative perception for the sector in which the company is operating and hence the stock seems to be out of favour for a long time. Also there has been some amount of negative impact due to GST and demonetisation because of which the earnings were impacted. We believe as economy picks up, the company will be direct beneficiary of higher consumer spending.
The stock recommendation for the month of September 2017 has a very strong balance sheet. The company has no debt on the balance sheet and on the contrary has cash almost equivalent to 15% of the market capitalisation of the company. So we have a stock which has a limited downside in case the market falls and on the other hand we can expect good appreciation.
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