Last Updated: Sunday, January 26, 2020

Butterfly Gandhimati a multibagger in making?

Sector: Consumer Durables
Industry: Electronics/Appliances
LTP : 274 (Jan25, 2020)
Butterfly_gandhimati_stock_idea Butterfly_multibagger
NSE: BUTTERFLY

Butterfly Gandhimathi Appliances Ltd. engages in manufacture of household appliances. Its products include mixer grinder, LPG stove, pressure cooker, table top wet grinder, water heater, electric fans, air coolers, electric iron, and others. The company was founded on February 24, 1986 and is headquartered in Chennai, India.
the company has reported a net profit of Rs 8.38 crore on revenues of Rs 241.44 crore For the September quarter of 2019. The company EPS for the September quarter of 2019 stood at Rs 4.50.

I find this company to be one of the most exciting investment ideas currently and would like to present it to the wider investment community. However, if there is any existing thread on this company, then the moderators may close this.

At the outset I would like to apologies as I have been wanting to initiate a post on this company since long. However, my perennial laziness has prevented me from doing so till now (It has also prevented me from initiating any thread till now for that matter). In the meanwhile, the company has runaway to a market cap of Rs.1,100 Crores.

Most of the investment Hypothesis can be read through from the attached report where the analyst has articulate the key drivers very well. To save time, effort and space I would like to run you through the key drivers of this story. Although a bit dated, it captures most of the points well.

Secular Growth Story- Kitchen appliances sector has always been a darling of the Stock Market and we all know the stratospheric valuations commanded by companies who have exhibited profitable growth strategies in this segment. Specifically, the sub-segments in which the company operates, there is a large segment of unorganized market (in some case, as high as 50%) which is expected to be consolidated rapidly post introduction of GST. Hence, I expect the company to exhibit impressive market share gains in its key markets and segments. Would advise you to go through the latest investor presentation as attached to understand their key sub-segments among other things. Most of it is pretty self explanatory.

This counter was badly beaten down in mid n small cap mayhem as valuations were too high. But from last one year the management has become quite active. There is continuous improvement in sales,margins, working capital cycle etc. And they are really expanding their business geographically.
In north region butterfly was an unknown brand but from last few months , We have come across alot of Butterfly brand hoardings outside prominent stores. Recently company managed to make online presence of butterfly brand specially through Indian eCommerce platforms Amazon and Flipkart.
Though competition is stiff and its not easy to gain Market from existing players, it all depends what strategy they are applying.
Advertisement has been mostly limited to hoardings outside stores only.
But yeah something is happening as far as geographical expansion is concerned.

Buy Butterfly appliances from Amazon

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