Cravatex is and will be a multibagger
I have not done heaps of research on this one but it does not require too much research.
Saroj Kumar Patni brought this stock into my attention on this blog. He is listed as one of the followers. I had rejected the idea because Cravatex sold one time use products like treadmills. I was also not sure of Proline brand being part of Cravatex or separate entity. There is no research report as of 11th November 2010, nor any institutional holding in it, which goes on to prove that retail investors like Saroj are miles ahead of institutions. This is why we, retail investors, have advantage over elephants which charge 1% in commissions and also front run their personal orders before buying for the fund. Funds will buy Relaxo after it crosses 1000 crores in turnover and atleast one other Mutual Fund has bought it, otherwise they risk getting fired. Our bane is, we sell too early, have less funds but more ideas. Hippopotamuses have less ideas, more funds and greater greed and less guilt for losing other people’s money.
I read news stories in last two months that it will bring in FILA products to India. It was not known at the time when Saroj sent me message to check out Cravatex, whether FILA will go alone and sever ties with Cravatex or will stay affiliated with Cravatex for Indian market. I recall having visited Proline showroom many years back in CP, New Delhi. They are openeing shops for FILA in Mumbai and my brother informed that they have opened two shops in Inorbit mall in Hyderabad.
It now looks like it will be part of Cravatex. I am both, unhappy for myself, because I cannot buy it, my money is locked in Photoquip and other stocks that I dont want to sell and happy at the same time for you and my father who bought some yesterday, very few quantity, couple hundred. I communicated to my brother yesterday to take a big bank loan to buy this share, don’t think he will.
All in all, a lovely story, I regret to have missed out on. FILA sells over 1.5 billion $ worth of merchandise globally. In next 4-5 years they will sell 150 crores of goods in India. Net profit will be around 50 Crores in next 4-5 years. EPS will be 500 Rs, share price will be between 5,000 Rs and 10,000 Rs as its a trendy retail fever story. It could even be 20K. Enjoy folks. This is what I spoke about in my previous post as “Killing the BSE index next year” in one of my previous posts.
Keep your micro cap ideas posted here…and dont forget to thank Saroj K Patni. If you make a few lacs/millions killing after reading it here, please dont forget to donate atleast 500 bucks here
I have only spoken with management once, and few google searches. I dont have these shares in my personal account. Only couple thousand would be all my family members have this. So, I am not exposed to this yet but my plan was to switch to Cravatex from Photoquip with atleast 20% porfolio weight in 2011 but I dont want to do that today. I have missed the bus due to taxation and other reasons, no reason why you should. It should outperform sensex by huge margin.
Thing to watch out may be equity dilution and too aggresive retail expansion. Get rich !