Views on Life & on Equity Investing

Wonder, Wealth & Abundance

Elinchrom and competition

with 10 comments

I have done sufficient research before getting into it myself and writing about it here. Over next few weeks, I will be posting useful links pertaining to this story.

Some of worlds best photographers vouch for Elinchrom. I have visited dozens of photographers discussion boards and participated in conversation or read their opinion. Top brands for digital studio lighting are Elinchrom, Bowens, Hansels, Profoto, Broncolor. While you will find zealots who love one or the other brand, top two undisputedly are Elinchrom and Bowens. I would add that all top photographers use Elinchrom in one way or another.

Bowens leads in UK because it was founded in UK in year 1923 and has extensive service/repair network. All top brands are over 50 years old. This proves that its not easy to displace leaders, also because market is extremely niche and focussed, Tata or Ambani would not be interested on this size of market.

Elinchrom figures as Mac in aesthetics while others can be kindered to Windows, Linux flavours, Solaris. Bowens also makes high end equipment but they are bulky and heavy. Also, Bowens trailed in remote controlled flashlights for a good number of years. Latest news is that of Elinchrom being ahead of wave with iPad, iPhone, iPod interface while completition is always years behind.

While Elinchrom is expensive, it pays off for discerning professionals. In India weddings are big event and the photo shoots leave a lot fo be desired in this country.

Savour the photographs by some of world’s leading Photographers.

Andrew Gransden ranked #1 in above collection does use Elinchrom so do the rest,

So does Marco Grob, who specialises in portraits for celebrities like Obama, Bill, Hillary Clinton, George Clooney and who’s who of Hollywood.

List goes on, will post more links later.

Elinchrom has 85% market share in India and other’s the rest in high end segment. We need to keep tabs on these numbers, pizza pie itself will grow bigger though with bigger pieces for all foodies.

I am keen to know what photographers/photo studios think about it in your circle. Prabhakar, a friend and fellow investor sent me a statement by one of his photgrapher pals -‘ Photographer friend said – “I have their studio light and it still works great after 8 years” ‘


Written by amitdipsite

September 20, 2010 at 4:02 am

Posted in Uncategorized

10 Responses

Subscribe to comments with RSS.

  1. Hi Amit,

    I am one of the regular reader. I appreciate your effort in finding the multibaggers and sharing it with us. As you requested in last post me too dig into the photographers forums and felt the dominance of Elinchrom. One question, since it is highly durable (8+ years)and also in a niche market how would be the future growth%?


    September 20, 2010 at 11:18 pm

  2. Hi livefms,

    Thanks and its a symbiotic relationship and out my self interest too. If I do not share these hidden ones, they will take a bit longer to get ripe.

    Lets do this long thought experiment:

    Assume average age of 20 years for all Elinchrom products, a simplification, assume its fixed. Those who bought in 1990 now need to replace in 2010. What choices do they have ? They need to choose between local brands or high quality ones. Those who had high quality ones, will not settle for inferior quality.

    Since Elinchroms has been selling for half a century, upgrade cycle is happening every year.

    So assume those who had this brand in 1990 will buy it again as its still leading.

    Similar analogy of durable argument is seasonal business – people are mistaken who do not not pay good multiples to companies with seasonal business.

    Another experiment:

    Say, company A has EPS of 10 Rs every month and growth of 10%, company B has EPS of 120 Rs in month of June and 0 in all months with same growth rate of 10%. They should command similar PE multiple and price should be same as long as they have same future prospects and same dominance in their industry. Majority sees this differently.

    Therefore we need not worry about 20 year durability cycle just as we need not worry about company selling goods just in month of June.


    Photoquip participates in global growth as it manufactures for them. However, India is in a sweet spot and (yet to be confirmed) Photoquip must be getting higher profits from sales within India than outside, so we should see once in a life time (10 year+) rolling period where majority of professionals in India start using high quality gear.

    In my discussion with CFO of Photoquip, Management expects similar growth as that in past. I am hopeful of even better because:

    Media industry has yet to reach its full potential in India.

    I think next 4-5 years will be better than those in past, the way Elinchrom is progressing.

    New venture.

    Story keeps evolving, so needs review every few months. Who knows Photoquip may have some other business as main and Elinchrom manufacturing, marketing, servicing as secondary just as Titan Industries, watches to gold.

    Keep eye on competitors and Elinchrom and expect them to make new products and improvements each year.

    Car is durable but cyclical, cooker is durable but not cyclical, therefore price inelastic, same for these products.

    Although I dislike tech companies but since top 4 players have been around for 50+ years and still at top, I dont think they will be displaced anytime soon. We'll keep an eye as long we are in.

    That said, even if there were to be just 5-10% volume and 2-5% value growth serious money can be made (Read 5-10 times). Its more than numbers story in my opinion at this point.


    September 21, 2010 at 12:42 am

  3. Hi,

    I think it is more of a “Moat” & “business model” story than growth.

    These guys have great moat, as confirmed in your post.

    These guys are manufacturing great quality equipment and directly selling in India, in addition to supplying to Elinchrom.

    Looking at their website, they are also selling Elinchrom equipments not manufactured by them.

    Even with out considering the above facts, stock was cheap until yesterday. But considering the above facts, it still looks cheap.



    September 21, 2010 at 2:15 am

  4. Thanks Amit. I got your point. What PE range should be considered as value buy for these kind of stocks?


    September 22, 2010 at 3:53 am

  5. As a guideline PE ratio should be less or equal to future growth i.e. PEG ratio. But future growth is hard to imagine.

    Since this isn't a chemical / commodity / cyclical company, I am comfortable with 20 PE, same as that of TTK Prestige or Page Industries which I also consider as a Buy. Anything under 10 PE is a daylight robbery, a steal. But markets can decide to keep it undervalued or go overboard and make it expensive.

    Those you are selling today don't know what they are doing or anything about the internals of Photoquip, they must be technical players who will regret it.

    I healthy sleep with profitable returns are key ingredients. So one can bet a bigger part of portfolio to it as well, unlike with other micro/small caps where event risk exists.

    If you can hold it for 3 years it can be a 10+ bagger.


    September 22, 2010 at 4:46 am

  6. With a market cap of 17 cr this is a micro cap stock. Betting a bigger part of your portfolio on a micro cap with no dividend record is very risky in my opinion. Being a niche player and backed with strong brand, I would allocate a small part of my portfolio and leave it to the market to decide. If market gives a thumbs up, I will add to my holding, even if it means buying at a much higher price.


    September 22, 2010 at 5:44 am

  7. Hi MG,

    I agree with your process and opinion..its a good way to buy at higher and rising prices once recognised. Watering fruit and flower bearing plants (growth recognised by markets) and killing weeds (non performing ones).


    September 22, 2010 at 6:42 am

  8. Hi Amit,

    I am new to your blogs but having read the report published by you, i am quite impressed. It's a good thing that you publish your finding so that after appropriate due diligence other's can earn as well. I agree that you have vested interest still i appreciate what you are doing.

    Probably it is not the right place to post my comment but i would like to know what you think about Gitanjali Gems. I am quite confident that it's a multibagger in the making. Realizing the vast knowledge that you have about share market i thought i will take a second opinion and it might help other investors as well who are thinking about Gitanjali.

    Few positives –

    1) trading at pe of 10
    2) renowned brands like gili, nakshatra, d'damas etc
    3) gitanjali lifestyle
    4) recently entered into infra business
    5) in process to merge/demerge it's business due to presence in so many verticals
    6) good bonus candidate
    7) in process to aquire an italian brand
    8) planning to to increase the outlet from 2000 to 5000.

    Waiting for your inputs on the same.



    September 27, 2010 at 12:49 pm

  9. Hi Shadab,

    I did have Gitanjali Gems last year around 60 level and got out at 80s, and not tracking them now.

    I suspected Mehul Choksi and wrote here, read comment by 'amitdip' at link below, other than that one incedent and some debt I liked the story.

    They have awesome brand recall, probably better than Titan Industries's brands too other than Tanishq. Not sure about certain multibagger but one wont lose shirt.

    Thangamayil Jewellery is another one expanding retail chains but I dont know about their brand recall.



    September 27, 2010 at 10:19 pm

  10. My comment on moneycontrol message board:

    Hi Pradeep,

    I too am invested on this counter for long term. I have written extensively on my bllog about this. I believe if photoquip sticks to just Elinchrom, not gitzo, klik, manfrotto, snapz, or any new line of business then this can be not only 1000 Rs but 3000 Rs. Here is the logic:

    India has huge wedding photography market. Photographers are producing junk and crap on mass scale. Compare wedding photos of India vs West, pick any link from my bllog. Presently only 1000 indian photographers/photo studios are buying elinchrom gear per year i.e. 1000 * 1 lacs Rs per gear = 10 crore Rs. That time isn`t far when annualy 10,000 photographers will buy this gear when living standards improve, customers demand, better qualified photogs from professional institutes realize importance of softbox, better gear than DIY home made gear. Presently only flash is used in Indian marriages for still photography, this is set to change with use of softbox and light shapers, especially when customers realise how horrible the quality difference is between east and west.

    So, I have tried to prove that demand in India will increase ten times domestically from 10 crore to 100 crores over next few years.Its a fantastic business where you can increase price by 2-4% each year above inflation. Profits of the company may be upto 20-50 crores in 5 years, translating to 40-100 Rs EPS




    October 20, 2010 at 7:29 pm

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: