While Prestige trades at a P/E of 14.44, Hawkins' stands at 12.3, a tad higher
The recovery in consumer durable demand has put wings in the stocks of kitchen appliances and utensils makers and it's showing in the stock prices of TTK Prestige and Hawkins Cooker, two leading manufacturers of pressure cookers and utensils.
The stocks have not only gained close to 30% so far in 2010, but also have outperformed the Sensex in the past one year. Against a two-fold increase in the Sensex, these stocks have jumped more than five times since the recovery in the broader markets since March 2009. Moreover, both stocks made their all-time highs.
On Monday, the momentum in the stock price came after Prestige announced the launch of a new range of induction stoves last Friday. These stoves runs through power, but don't generate flame and need induction compatible cookware. To support this requirement, the company is further planning to launch a new range of pressure cookers and cookware with an induction base that can also be used on conventional gas stoves and hobs.
While for most part of past one year, the Hawkins stock seemed taking a lead over that of Prestige since early March this year, the latter has kept an edge over the former. The rising disposable income of the Indian middle class as well as a comparatively-defensive nature of the industry has helped both kitchen appliance majors sustain revenue growth in the past two years. However, Prestige's profit margins have remained on the lower side compared to that of Hawkins. One reason for this outperformance could be the company's diversification into the realty sector.
On a standalone basis as well, for the year ended December '09, even as the revenues of both these companies grew by a similar 24%, Hawkins demonstrated a higher profitability growth. While the operating profit (PBIDT) more than doubled during the trailing 12-month period ended December '09, net profit grew by more than 125% against a growth of 81% in the PAT of Prestige for the period. At the current market price, Prestige is, however, trading at a P/E multiple of 14.44 which is closer to its past five-year average of 14.3. On the other hand, Hawkins is currently trading at a P/E of 12.3, which is a tad higher than its past five-year average of 8.5.
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• Nifty FNO expiry at 5260.40 was at the highest level since the December expiry. MOM markets moved up 8%. The unprecedented FII flows was one of the mains reasons for the same.
• Market wide rollover was at 83.98 % compared with 83.61% in March.Nifty Midcap saw only 50.05 % rollover compared with 97.83% rollover in March.
• The bond market is saying that it’s safer to lend to Warren Buffett than Barack Obama.Two-year notes sold by the billionaire’s Berkshire Hathaway Inc. in February yield 3.5 basis points less than Treasuries of similar maturity, according to data compiled by Bloomberg. Procter & Gamble Co., Johnson & Johnson and Lowe’s Cos. debt also traded at lower yields in recent weeks.
• The above situation can lead to a significant change in the financial assumptions.For a change we might take BERKSHIRE HATHWAY BONDS vis a vis 30 YEARS US GSEC as a benchmark for risk free returns in computing portfolio returns
• Issue now is not on probable impact of the RBI tightening but what RBI will do at its next policy meet on 20th April.
• Nifty futures high in last upmove was 5303 which was a freak morning trade. The actual volume weighted high was somewhere around 5285.Many in the markets believe that the next breakout level would be beyond this level.
• Keep a tab on FII buy figures.Yesterday the FII Segment was a net buyer at 653 crores.
• DII segment selling seems to have abated as of now. Net sell at 157 crores.
• Froth seems to be returning to the IPO market in smartly priced issues getting oversubscribed. Persistent system was an attractively priced issue but 93X was on a higher side. Lets hope Retail segment makes some money here :)
• Nifty has been on an unrelenting rally since it tried to cross over the 200dema at 4675 odd zone.
• Short Term Trend turns down on a closing below 5140. Watch the level.
• In the month of March till date (MTD) FII s have been net buyer to the tune of 12125 crore rupees. This kind of inflow has been unprecedented in recent times.
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