Swasti Vinayaka Art

This is an investment idea so it's a buy and hold stock (no stoploss or target), these investment ideas will be reviewed every March. This ideas may give you a multi-multibagger return in a long run.

Price: Rs 7

Swasti Vinayaka

Some times we will get stocks at throw away prices, we are going to discuss one such stock which has all the good qualities to give guaranteed returns in one year time in my perspective.

Selection of stock is done based on below merits
1. The company is maintaining healthy dividend yield of 6% for last 7 years.
2. Company D/E level came down from 2.4 to 0.6 in last 4 years, so expecting more dividend from next year.
3. Net profit margins are improved from 14 to 29% in the last 3 years.
4. Company operating margins are improved from 32% to 55% during the last 3 years.
5. Company ROE, ROCE levels are 32% & 30% respectively.
6. Any company management who maintains good relationship with retail share holders coupled with good dividend distribution policy & strong fundamentals, surely will be rewarded by market participants.

What it does: Company is operating in real estate, sale of jewellery & Signio paintings (through canvases that tell tales of the Hindu epics, Islamic histories and chronicles).

Promoter family hold 51% stake in company, management is clearly investor friendly considering the fact of dividend distribution across listed companies though the stock prices are less than 9rs for the last 7 years.

Currently 75% of revenue contribution is coming from risk free rental income, the other 25% is coming from other divisions such as jewellery & signio paintings sale. The Signio painting division certainly can prosper considering it as a premium segment serving for higher classes of the society where margins will be very high. This segment can provide the requisite next leg of growth for the company going forward.

Financials

Improving Financials for the last 3 years
Operating margins for the last 3 years were 32% , 48% & 55%.
EPS 0.35, 0.48 & 0.64
Continues dividend track record for last 7 years.
Positive cash flow for the last 8 years.
ROE 24, 28, 32
ROCE 22,27,30
PAT Margins 13%, 22% & 29%.
Tax rate 33,34 & 34
D/E ratio reduced from 1.9 to 0.6 in current FY.

When the fundamentals are good, business exhibits strong financial ratios, high dividend distribution track record of last 7 years coupled with promoter integrity in any company, market always will give a premium in valuation to that company.

Note : I am quite sure that this company is going be listed in next year economic times multibagger stocks section, please mark my words.