This is the multibagger I was talking about | Photoquip
Ladies and Gentlemen,
I am thrilled to have located a bargain for myself and screened one potentially for some of you, and I am extremely ecstatic to present this before you . Very glad that I sullied my hands and dug deeper into it finally. Name of this enchanting mermerising beauty is Photoquip Ltd. As of today I know of no research report that has been written on this company, nor will be one written for next couple of months atleast. Time to briskly over take slow elephatine walk and institutional apathy to non dividend paying/small cap stocks ! Its current price is 35 Rs and its a buy till 100 Rs with current financials.
Let me explain how I missed this diamond. I have to admit that I am extremely allergic to tech stocks, IT companies, any sophisticated and futuristic technologies. Predicting winners are way too hard in small caps due to creative destruction . Big players can chug along and are easy to predict like Wipro, Infosys and suchlike . That was the reason I could not pick Symphony Comfort Systems early on at 25 Rs levels , and picked only @ 125 coz of word SYSTEMS, its now changed its name though to just Symphony Ltd. I also missed Dhanuka Agritech for same reasons early on in rally, TECH in name and I gave a pass.
Photoquip stuck in my stock screener several times earlier and after cognising them as a technology intensive company I gave them a skip. Recently I tried probing deeper into it and noticed that they are sitting on black gold. Company is worth its weight in Gold.
Photoquip owns most powerful brand for digital flashlights in world for sales in India and exports to its Swiss owner which sells across the globe. The brand is Elinchrom. It would be an understatement to say that Elinchrom is to digital flashlights as Tag Heuer/Omega to watches or Ferrari to Cars. There are only a handful of other brands like Bowens , Alienbees, Profoto and Hensels at the summit of photographic flashlight pinnacle which come close in some aspects of photographic flash equipment . Photoquip have long term relationship with Elinchrom since 1984. It would be rather germane to say Elinchrom is to flashlights what Bugatti or Lamborghini is to Cars or Rolex to watches, Rolex too is a Swiss brand like Elinchrom.
India is ready for luxury flashlights and currently dominated by unorganised sector and ersatz imitations will be on their way out with advent of our schools churning out more professional photographers, new magazine genre, more TV and fashion events. In top end segment Elinchrom has 85% of market share in India and a lions size share globally too. They do have entry level equipment for masses too.
Another venture of Photoquip which is promising is Digital Photo printing thorugh its SNAPZ brand of digital lab. I have not visited India extensively recently but notice this trend very much in western countries where I have visited, Europe, States and APAC too (NZ)
As Indian market matures, more of Elinchrom’s products will be added to repertoire and add to Photoquip’s winning streak.
Photoquip is a very well managed company extending beyond Elinchrom brand also, it will take advantage of its unparalleled nationwide franchise network in this niche. I believe promoters have pledged their shares only to load on more shares from open market over the past 4+ years and will take it all the way to 75% maximum permissible limit by SEBI. Needless to say company has very bright prospects ahead.
I have had the privilege to speak with few people in this field including Mahesh Nair and Vivek Divekar from Photoquip. I have dug up many discussion forums across the world in Europe and the US to get an opinion of ace photographers alive. They vouch for Elinchrom brand and my heart would race.
I have to add that products are same as TTK Prestige pressure cooker, as in they last 10-20 years depending on use. Quarterly results can be erratic but story has not even begun. Upgrade cycle of professional photographers and rise in standards will see this going places.
You’re buying a Rolex quality company. Time is on your side in more than one way ! Relax and get a snoring sleep, I know I will, sprinkled with day dreams. I believe we need not worry every quarter, we’ll retire rich if we hold it. Quarterly performance may be chequered. However, we’ll keep tab on competition and management. While I do not fall in love with stocks, for once I have, pinch me please and wake me up.
While I clearly see doubling of revenues for Globus Spirits, same cannot be said with equivalent certainty for this luxury brand for short term. This is a multi year long term story. I may or may not own shares of this after a year or two and may stop tracking, but its an auto pilot stock. Don’t ask me valuations please, look at Timex Ltd’s valuation on BSE and in my humble (or perhaps not) opinion, Timex is a decent brand in watches but its a disgrace to Rolex if we compare them. While I dislike getting into expensive stocks like Titan Industries, Shoppers Stop, Zydus Wellness etc that stay pricey. I harbour no doubts that Photoquip is dirt cheap for what its worth, it can become a fairly expensive stock and stay like that. Point isn’t whether we will profit from it or not, but how much profit ! Lets wait before its discovered and whether we ride all the way to it being costly. My premise for buying is – Indian story for Photoquip has hardly begun, exponential growth phase is bound to kick in sometime soon. Secondly, brands are key, valuations will follow.
Warren Buffet bought sports magazine many years ago, knowing that for some folks life is not business, wealth, or day job, but its biking, for those buffs motorcyle is meaning of life. If you have found a business where you can increase price by 2% above inflation every year, without capital investment, you have found a wonderful business as in See’s Candy. I strongly correlate professional photography with motorcyle magazine analogy.
Any feedback from your photographer friends on this blog is highly appreciated.
Have a profitable investment.
Some sales numbers in context again not to be interpreted with quarterly bias. Trading and manufacturing activity affect margins. In 2009 there was 1 crore
of other income as well.
Revenues(Rs Crores) Profit after Tax (Rs Crores)
2003 15 0.17
2004 17 0.21
2005 15 0.27
2006 13 0.79
2007 26 1.5
2008 27 1.5
2009 36 6.0
2010 46 4.0
Disclosure: I have bought it between 32-35 levels yesterday and today and have vested interest. Please do your own due diligence before buying. Sold part of Simran Farms into Photoquip. I will be adding more over coming weeks irrespective of direction in price.