Hawkins Cooker has done again a brilliant job by posting stronger-than-expected quarter earnings once again by utilizing its core advantages and strengths. Its continuous push and penetration for its product line across rural and urban areas aided the strong show in Q3 FY20. The firm has an extremely powerful track record of growth, opportunities, and merits investors’ attention despite the sharp run-up in its share price.
Hawkins Cooker Quarterly Result Analysis
Income sales and revenues for the last quarter rose 11 percent year-on-year (YoY) to Rs 193 crores. Gross margins gained extremely well from a richer product mix and easing commodity costs. Cost control measures further boosted the operating margins. Earnings before interest, tax, depreciation, and amortization (EBITDA) rose 59 percent YoY to Rs 31 crores. Profit after Tax jumped due to a lower income tax rate.
Regardless of the quelled consumers sentiments, the organization has conveyed a solid exhibition all through Financial Year 2020 with a revenue gain of 13 percent and operating income growth of 39 percent. Enlargement of seller dissemination arrange alongside new item dispatches have been driving the topline in late quarters. Higher promoting and showcasing has expanded the brand perceivability among purchasers and helped piece of the overall industry gains against its strong rivals such as TTK Prestige, Pigeon, Butterfly Gandhimati, Wonderchef).
Favorable Input costs to boost Margin
Aluminum, the crucial raw material for the organization, has been in a downtrend for the past few quarters. London Metal Exchange benchmark for Aluminum has declined about 25 percent since the beginning of 2018. Going ahead, Hawkin’s gross edges are required to solidify as the ware costs have seen a sharp value adjustment streaming the droop in worldwide financial movement because of the flare-up of coronavirus.
Excise duties to Dent Industry Growth and Opportunities
The Union Budget 2020 reported obligation, revisions and corrections on various electric and electronic goods to support domestic assembling and manufacturing. Import duty on family unit items, for example, nourishment processor, juicers, stoves, cookers, toasters have been raised double-time to 20 percent. These updates mean to control the inventory of imports and rather advance in-house creation of such merchandise and enterprises. Be that as it may, the move would have an impending effect in the close term as the Indian players import their middle and completed kitchen machines from China. Hawkins appears to be very much put to explore the difficulties as the organization sources its items locally and has insignificant nearness in the kitchen machines and appliances segment.
Hawkins Cooker Outlook and Future Opportunities
The market for pressure cookers is required to develop over the long haul on the rear of government activities, for example, Pradhan Mantri Ujjwala Yojana, which is expected to help poor family units in the reception of cleaner cooking fuels, for example, Liquified Petroleum Gas. Be that as it may, the close term request viewpoint seems dubious on the rear of disintegrating macroeconomic conditions.
Hawkins offers a fascinating stock suggestion inferable from its solid image acknowledgment and strong business basics (zero net-debt balance sheet report). The business has cautious characteristics of consumer staples stocks, which are commonly viewed as places of a safe haven. Be that as it may, the stock has increased 80 percent over the most recent a half year and the valuation (multiple times FY20 evaluated profit) encourages us to purchase the stock. But long term investors should, consequently, anticipate buying the stock during this Stock Market Correction. As per the current closing on 20 March 2020 it trading at Rs 3650 and we expect to Buy and Hold this Stock for Long Term Horizon of 2-3 Years with a Target 10000.