LA OPALA RG LTD.
 
  

 
 

SHARETIPSINFO >>Research Reports >> LA OPALA RG LTD. (17-03-2009)

 

LISTING
CMP
Rs 14.80
52 WEEK HIGH/LOW
Rs 36/Rs15
FACE VALUE
Rs 10
PE RATIO
2.9
P/BV
67
MARKETCAP

Rs 31 crore

COMPANY OVERVIEW:
LA OPALA RG LTD, promoted by Mr.Sushil Jhunjhunwala and Ajit Jhunjhunwala, is involved in the business of manufacturing Opal ware and Crystal ware product. It started manufacturing Crystal ware in march 1996 sourcing the exclusive right to use the technical know-how ,information ,data for the manufacture and sale of crystal ware(Brand name: Solitaire) in India  and abroad ,from Doosan Glass of South Korea, a leading manufacturer of Crystal ware globally. The Company made a diversification in the field of glass tableware by producing lead Crystal ware at Madhupur, Jharkhand. In 1999 the company merged with itself the Radha Glass, a group company manufacturing the plain Opal ware.


Product Basket: La Opala deals in Opal ware and Crystal ware. It has a range of 100 products including teacups, mugs, plates, bowls, casseroles and many more. The USP of the product is its elegant design, quality, and 100% recyclable marks.

Brand and Distribution Network:  it is the only well established name in the crockery business in the country. The product is being sold through departmental store, general utensils merchant and gift retailer. 15% of the revenue is derived from export. USA, UK, Spain, Belgium, France, Germany, Japan and Dubai are some of the countries where the company exports its product.

Exploring New Market: The Company is exploring the opportunity of supplying its product to big hotel chains in the country. It is increasing its focus on the export and is eyeing around 35-40% of the total revenue from export.

INVESTMENT RATIONAL:
Strong brand name and large distribution network.
Penetration into new market will drive the sale.
Full effect of expansion is still to be utilized.
Liquid investment worth Rs14 per share.
Trading below book value.
People becoming more class and brand conscious due to higher spending ability, there will be surge in demand once the current situation improves.


KEY CONCERN:
Economic slowdown is putting pressure on margin.
Increased debt burden is affecting the bottom line.

 

SHAREHOLDING PATTERN:

 

 

NO.OF SHARES

% OF TOTAL

PROMOTERS

6810744

 

64.27%

 

INSTITUTION

565682

 

5.34%

 

GENERAL PUBLIC

3221106

 

30.39%

 

GRAND TOTAL

10597532

 

100.00%

 

FINANCIAL:

 

 

31/03/06

31/03/07

31/03/08

TOTAL INCOME

47.61

54.74

56.47

EXPENDITURE

-39.18

-45.54

-49.52

OPERATING INCOME

8.43

9.2

6.95

DEPRECIATION

-1.69

-2

-3.48

PBIT

 

6.74

7.2

3.47

INTEREST

 

-0.07

-0.19

-1.87

PBT

 

6.67

7.01

1.6

TAX

 

-1.93

-2.44

-0.57

PAT

 

4.74

4.57

1.03

CHANGES IN TOTAL INCOME: CAGR IN TOTAL INCOME IS 8.9%.

CHANGES IN OPERATING PROFIT: CAGR IN OPERATING PROFIT IS -10%.

CHANGES IN NET PROFIT: CAGR IN NET PROFIT IS -53.3%.

Key Highlights:
Total income has increased over a period at rate of 8.9%.
Operating income decelerated at rate of 10%. This was mainly due to the decline in operating income in 2008. Rising raw material price and inflation was the reason for decline in operating profit.
Net profit decelerated  at 53% this was due to the increased interest burden and depreciation in the year 2008.

RATIOS:

 

 

31/03/06

31/03/07

31/03/08

EPS

 

4.471698

4.352381

0.980952

OPM

 

17.70636

16.80672

12.30742

NPM

 

9.955892

8.348557

1.823977

INTEREST COVER

96.28571

37.89474

1.855615

KEY HIGHLIGHTS:
EPS declined in 2008.
OPM declined in 2008 due higher raw material cost.
NPM declined in 2008 due higher interest burden and depreciation. Higher interest burden is due to the expansion program initiated by the company 2006.
Interest cover declined drastically in 2008 due to higher debt taken by the company for expansion.

COMPARISION OF Q32009 WITH Q32008:

 

 

31/12/07

%CHG

31/12/08

 

 

 

 

 

TOTAL INCOME

16.54

20.67%

19.96

EXPENDITURE

-14.53

 

-16.42

OPEARTING INCOME

2.01

76.11%

3.54

DEPRECIATION

-1.18

 

-1.19

PBIT

 

0.83

 

2.35

INTEREST

 

-0.79

 

-1.09

PBT

 

0.04

 

1.26

TAX

 

-0.01

 

-0.19

PAT

 

0.03

3466%

1.07

KEY HIGHLIGHTS:
Q3 2009 looks in the better shape as compared to Q32008.
Total income rose by 20.67%
Operating income up by 76.11%.
Net profit surged by 3466%. This hyper increase is due to the lower base of Q3 2008 Net Profit.

VALUATION:
We expect the earning in FY2010 at Rs4.5 per share. So the company is trading at 2.9x to FY2010 earning. We value the company at 5x ,this translate the price at Rs22.5.


CONCLUSION:
The investment on the counter should be done with medium to long term perspective. The price target will be achievable in one year time frame. The company stock price behaves like a commodity. The behavior pattern is cyclical. At the top side it moves to Rs60 and downside Rs14. The cycle is of six year.


     

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