ShareMarketSchool

Associated Alcohols & Breweries Ltd - Fundamentals & Technicals

Long
NSE:ASALCBR   ASSO ALCOHOLS & BREW LTD
Associated Alcohols & Breweries Ltd is in business of manufacturing and trading of ENA, Indian Made Indian Liquor (Country Liquor), Indian Made Foreign Liquor and Hand sanitizer. It operates through Potable Alcohol segment.

FUNDAMENTALS:
> It is a micro-cap company with a market cap of just Rs .822 Cr . Think like the company have just started crawling after coming out of mother’s lap.
> The ROCE is at 34% and ROE is at 26% which is very very impressive considering the size of the company. Positive.
> Stock P/E is at 14.2 which makes the valuation too attractive as compared to the sector P/E at 36.41. Positive.
> Higher than Industry Revenue Growth: Over the last 5 years, revenue has grown at a yearly rate of 11.69%, vs industry avg of 3.05%. Positive.
> Increasing Market Share: Over the last 5 years, market share increased from 1.29% to 2.12%. Positive.
> Lower than Industry Debt to Equity Ratio: Over the last 5 years, debt to equity ratio has been 24.6%, vs industry avg of 91.03%. Positive.
> Higher than Industry Current Ratio: Over the last 5 years, current ratio has been 147.51%, vs industry avg of 102.59%. Positive.
> It is almost a debt free company, reducing its borrowings continuously on year on year (YOY) basis, that's a very good sign from investment perspective.
> Very robust Topline and Bottomline.
> It is increasing its cash reserve on YOY basis, currently have huge cash reserve as compared to its borrowings.
> The company has maintained its Operating Profit Margin (OPM) at or above 18% since last 5 years, that's again a positive sign.
> The company expands its alcohol manufacturing capacity; the plant will have dual features of both ENA & ethanol manufacturing. The estimated cost is about 110 crores and expected to be complete by June 2022.
> Popular Brands: McDowell’s’, White Mischief, Director’s Special, Bagpiper, Black Dog, VAT 69, Black & White Scotch Whiskey, Smirnoff & Captain Morgan

TECHNICALS:
> Stock looking very strong on chart, it is making higher highs and higher lows continuously since March 2020.
> Trading above 100 DMA and about to break 200 DMA.
> It is clear from volume at the bottom that accumulation is going on in the company on regular intervals and bull run will continue for long.

Fresh Buy - At CMP i.e. 455.
Old Buy - HOLD
First Target – 773 (+70%)
Second Target – 1092 (+140%)

Risk Management Tip: Never invest more than 5% of your capital in any single stock.

Happy Investing!
Team ShareMktSchool

Comments

Good analysis.....have been holding this for last 6 months...
Good investment pick for 2 yrs
+2 Reply
@AmitDaga, Glad that you liked it!
Even we have this one in our portfolio.
Reply
HI - what is the timeframe we are looking at ?
Reply
@mihir2021, 12-18 months for the final target.
Reply