Markets take away keep given tremendous returns recently, as well as nosotros were non comfortable to advise whatsoever stock. However the recent brusk lived correction seems to hold upward the best nosotros tin cope for now. This is 1 of the characteristics of classic bull market. Nifty seems similar headed for 10k !!
We take away keep been tracking quite a number of companies, but somehow the cost of many does non attract us to bring a dive inwards at this betoken of time.
Lets bring companionship operating inwards a good known sector trading at high P/E . Having said that, Aro granite industries has managed to remain inexpensive when compared alongside the sector valuations. The stock has rallied inwards recent times thence nosotros waited for an correction to come, as well as alongside a 10% correction ,now seems a skilful fourth dimension to get-go accumulating on dips alongside a two years horizon.
Company Background
ARO Granite Industries (AGI) was incorporated inwards 1988 every bit a 100% Export Oriented Unit for processing polished/flamed granite tiles past times Mr. Sunil as well as Prem Arora. ARO started commercial production inwards 1991 alongside an initial installed capacity of 72,000 foursquare meters at Hosur. In the twelvemonth 1995 the companionship went world to business office finance the expansion as well as shares were offered at INR 10 premium. In 2001 the companionship started a minute unit of measurement to procedure Granite random slabs alongside an initial capacity of 168,000 foursquare meters.The companionship directly exports its products to North America, South America, Europe as well as Far East markets.The companionship has since grown from line to line as well as has established itself every bit a leading granite exporter inwards India.
ARO is tardily changing inwards focus as well as is shifting towards the domestic markets to cut down the dependencies that may arise due to currency fluctuations.
Products
Granite Tiles & Slabs
The Tiling flora has iv Nos. of Pedrini Block Cutters as well as two Nos. of Pedrini Polishing Machines alongside an installed Capacity of 1,80,000 Sq.Mtrs per annum.
A New Tiling Plant alongside an additional installed Capacity of 3,60,000 Sq.Mtrs per annum has been comissioned.
The Slabs Unit is equipped alongside 8 Nos. of Gaspari Super Jumbomatic 480 Series Gang saws (350 x 210 x 480) two Nos. of xx Heads Pedrini Polishing line, 1 No. Grinding line of 12 Heads as well as 1 No. of Resin line
(Epoxy line) along alongside other required machineries alongside the installed Capacity of 3,90,000 Sq.mtrs per annum.
Consistent growth
Sales has been growing steadily.Bottom line every bit good has been growing at a skilful measuring human face 2012, where the company had expansion plans.This is acceptable inwards all senses. Recently the profits take away keep almost doubled . Its truthful currency movements also has give its percentage of profit. Even otherwise at that topographic point is an considerable change inwards bottom line.
Dividends
Company never missed dividends from 2001. We appreciate the management for this.
Regular bonus
Company has been giving 1 percentage for every two shares held, every v years. The recent bonus number was concluded recently.
Released Pledge shares
During March 2013 - June 2013 stream , all the pledged shares take away keep been released as well as directly stands at 0% pledge !!
After a long fourth dimension - technical breakout seen
Stock has been consolidation for a real long fourth dimension inwards a narrow range. Most of the impatient investors take away keep exited as well as directly the resistances are weaker than inwards the past. Technically nosotros tin encounter 100 levels inwards the brusk term 1 time 70's breaks out. Please banking concern bill nosotros are non motivating investors for brusk term gains. Value investing is all nigh patience.
Risks
Rise inwards raw material cost
This is a usual work alongside most of the companies. However ARO has done a skilful project every bit nosotros take away keep seen from the past times performance. Since the management is experienced we are certain alongside the cost management at ARO inwards the futurity too.
Debt
For a growing companionship debt is real common. We believe debt is depression as well as in comfortable zone. Once the involvement rates starts seeing south, which nosotros human face to give off anytime subsequently coming two quarters, it volition alone exercise goodness ARO positively.
Currency
However Indian economy is expected to exercise meliorate going forward, INR strengthening might bring roughly to a greater extent than time. One tin bring a telephone yell upward if nosotros encounter unexpected turns on the currency movements going forward.
Conclusion
The companionship mainly exports, as well as thence rupee plays an of import factor. In-spite of the novel authorities taking charge, inwards spite of markets rallying so much alongside huge FII flows, in-spite of so many positive things happening inwards the economic scheme - INR has stayed higher upward 60, as well as non showing whatsoever signs to come upward below drastically at to the lowest degree for roughly fourth dimension now.
The line of piece of work organization hither is non similar our previous recommendations where waiting longer tin alone fetch to a greater extent than gains. ARO is closely linked alongside currency as well as raw materials prices.
The rigid argue nosotros are suggesting ARO for two years is because of Modi's decision alongside abide by to infrastructure as well as housing which nosotros believe , makes ARO an attractive bet.
We are non a large fan of the line of piece of work organization or the telephone commutation aspects, but on a strict PE valuation the stock looks real inexpensive which may forestall whatsoever downside.
ARO is non highly fancied on the bourses right now. Having said that it was hard for us to ignore a companionship which has been constantly growing along alongside consistent dividends as well as regular bonus !!