Wednesday, April 14, 2010

Multibagger Series – A front runner

Dear Readers,

As promised in the previous post, I wish to light on an outstanding scrip in this new fiscal year. The following lines are my plain conclusions, compilations or suppositions to have this stock or all of the following grounds are collectively compelled me to hold this stock even in extreme provocative times. I am watching this scrip by a couple of years and day by day feeling more comfortable on the horizon developing by this company. When I search for good scrips to invest, it is one of them I found with alluring rationales and feels the path ahead is promising. If you feel comfy after a read, go ahead.

BSE Code---------------------------532606
CMP (13/04/2010)---------------- 153.65
PE -------------------------------------4.66
52 Week Low/High------------------ 53.15/166.90
Ever high since inception ---------301.00(Nov 2007)
Market Cap--------------------------198.82
Chairman/MD-----------------------Amitabh Parekh
Promoter’s holdings----------------33.91%

Parekh Aluminex Limited (PAL) is the leading conglomerate and exporter of Aluminium Foil Containers (AFCs), Aluminium Foil Rolls (AFRs) and Aluminium Lids. PAL is the single largest player in the organized sector in India with more than 75% market share in the business of supplying Aluminium packaging stuffs to Airways, Railways, Reputed Hotel networks and major caterers who serve food on travels/parcels. The ISO 9001:2000 and ISO 22000:2005 certified company is an apex name in AFCs in the globe and especially in the sub-continent.

AFCs are the most versatile, eco-friendly and attractive solutions for punters in this fast-food era. The compliance level and versatile features of these products are making PAL the leader in the segment and their products are utilized in domestic, industrial and commercial sectors globally. It leads the domestic market with sales to institutional/corporate customers including Air India, Indian Airlines, Indian Railways(IRCTC), various flight kitchens including Taj Air Caterers, leading hotel networks, Jet Airways, Kingfisher etc...

The flexibility and recyclable nature of Aluminium Foil Containers makes them the most appropriate packing/serving solution of the time and to the fore. AFCs are 100% recyclable and are far better for the environment than plastic or other alternatives. AFCs can be easily made as per specific requirements to suits user choices on temper, gauge and styles. These are defensive to extreme temperatures; idle from freezer to oven without trouble or damage. An AFC puts a resistant metal wall around the content, which assures product freshness and increased shelf life as well as capable to counter infections/micro-organisms.

Parekh Aluminex Ltd has around 80 avant-garde varieties of molds to form products that can pack every kind of solid, semi-solid and liquid eatable products in a hygienic, standardized and practical way. The company lead the market in the AFR segment with their ME brand of aluminium rolls and are also manufacturing the same on a job-work basis for Hindalco, the largest manufacturer of aluminium in the country, which markets it under the Fresh Wrap brand. The strategic three-year liaison with Hindalco gives the advantage of sourcing raw materials at privileged rates. It has an agreement with ALCAN, one of the established producers of aluminum in the world, to market AFCs and AFRs in Germany; and an agreement with the Danone group for supply of AFC.

The two production units are located in the Union Territory of Tax safe Dadra and Nagar Haveli with high-end production bases. PAL exports products to the United Kingdom, Bahrain, Turkey, Greece, US, South Africa, Dubai and Germany. It has acquired a Singapore-based company DES along with its customer base and has added Etihad Airways, Emirates Flight Catering, Gulf Airways, Thai Airways, and Singapore Airlines along with others as its customers. With over a decade of presence in international markets PAL has established a good name with international buyers for quality, variety and for punctual supplies. PAL has also in endeavor to trial exports to fresh markets like Nigeria, Yemen and Sri-Lanka with positive outcomes.

PAL is the first company in its category to receive the prestigious ISO 9001:2000 certification from BVQI, UK and the only company from India shining in the highly quality conscious European markets. The company assures a zero human touch to the end-product in their whole manufacturing process to preserve strict quality standards and drugs-related hygienic requirements set by international standard setters. By focusing on R&D, Parekh Aluminex is in endeavor to introduce innovative product variants which have not yet been familiar with the global markets. The promoter holding has been steadily increasing in the last few years. The company is under finishing of a 250Cr expansion project and it will boost their production in a great way.

The financial result of PAL for the current year and past 5 years are showing an increase of more than 35% CAGR on both sales and profit. In its first year of operation (1994-95) the company registered sales of Rs.4.40 million, rocketed to Rs.4212.60 million in 2008-09 and expect around Rs. 5400 million in FY 2009-10(It is one of the very few companies on which I usually sit with a calculator after every qtrly results). I hardly consider the transitory technicals while suggesting any stocks but here, having a book value of RS.205.18/- per share, and with Rs.32.98 trailing 12 month EPS, CMP around Rs. 150/- I think it will be a great buy even at current levels. Net Sales, PAT, EPS and BVPS all denotes, this business is heading to the right direction with a right pace. I think the following quote by Buffet, suits best for such scrips. “If a business does well, the stock eventually follows”..

My View on the scrip

I hope multiple fold returns from this scrip if you have patience. The revenue growth of this company is sustainable and the business model is outstanding. The gifted management has set few realistic goals which are likely to achieve in very near future, considering the history and current growth pace. The business has huge growth potential in the future and their products sell like FMCGs where the demand will keep increasing. The company has made big moves to penetrate the foreign markets. In addition, the booming retail spectrum, fast changing consumer trends, involvement of starred or reputed hotel chains, increasing fast food outlets, escalating Air & Rail traffic numbers and sizzling tourism scenarios will surely bless us in the long run. The stock has very low downside risk and the upper side is unimaginable. We will talk about this scrip after 2 more Aprils and hope you may secure your positions well before..

Dear clients , An anticipated ban on plastic is ahead and we may say “bye” to Manjushree at the right time and I hope PAL is the most appropriate substitute. Accumulate till that time and don’t skip the following link.

Comment please...

Happy investing & Regards

Shabu Thachat



  1. Sir,
    I brought this stock at Rs. 98 according to your recommendation. The company is increasing dividend every year. Book value of the company is also increasing. I think business related to fast food have bright future.

  2. Dear James,

    Thanks for the comment. You are one of the few who bought this scrip in cheaper valuations. Thanks for the trust and Parekh is still a good buy even in current levels, keep buying in every falls.

  3. i feel this stock is for long term investment and unknown to many people.The are some issues (which is unknown ) pulling this stock down and trading below book value.

    There are many stocks like this but only patience Investors will be benefited these type of stocks.

    please also track same type of stocks (Abisheik Industries, Sumeet Industries and Petronet LNG) and educate Investors

  4. Shabu, the company is expanding very well. Also it is showing good profits. Already the company is the market leader, and in India, and India is yet in a very nascent stage right now in this field. Hope we will get multifold profit from this company.


  5. Sir,

    Thank you for wonderful article.. You have a nack of picking of Gem stocks..

    Your recommended "Serious Toy" is really made a serious gain off late and now last week another gem pick - value ind is coming north with good pace :).

    Thank you

  6. Dear Madan,

    You are absolutely right and I see bright days ahead. Accumulate..

  7. Dear Venkat,

    Thanks for the comment and remembering good things.

    The post on that Serious Toy was on November 15 2009 and today exactly after 5 months it has made more than 100% gains. Value Industries also gradually setting its real pace

  8. Dear Mohan,

    Thanks for the comment and will check your points

  9. Dear shabu,

    Excellent article. I am a keen follower of this script. I always like the way you explain an investment decision. Looking forward for your articals,


  10. As usual, excellent analysis. Keep up the good work.
    Parekh is good but I always prefer which have substantial promoter holding as it gives me confidence.
    Here the promoters holding is less than 35%, which is a matter of concern

  11. Dear Nannu & Srikanth,

    Thanks for the inspiring comments. Every such comments motivate me in a great way and boosts my energy level to further researchs.


    The promoter's holding is an important factor in most of the cases. But few promoters are there, holding majority of shares with negative intentions. I think there is much more gimmicks behind this counts beyond our understandings. I know few stocks where promoters holding 90% or more. But according to me its not only an alluring reason to have that scrip.

    Regards & Thanks again for the comment.

  12. Shabu,
    can i buy these stocks(value ind and parekh )today,with current market price.
    will it be profitable?


  13. Once again a very nice article and I think your writing has added fuel to Parekh....great work Shabu and keep it up....

  14. Dear Shabhu

    thanks for great resarch which lead the way of some profir after cutting pockets by losses and losses,,,,,dear sir can u guide me for some more scrips like paral and can u tell me upto what level it can go, i collected at 210. can it cros 500 + levels
    Neeraj singhal

  15. Dear Mr.Shabu,
    congrats on your analysys..

    any way i saw this site today ...shall i invest in PAL still now? wats ur opinion...

    Have a nice day

  16. Dear Neeraj & Saj

    Thanks for the comment and please refer the following link.


  17. Dear Sabu,
    A very good report as always. Keep up the good work.
    PAL hits upper circuit limit of 286.80 today at around 9.30 Am.
    Do you think one could still invest in this scrip or wait for a fall of some sort?
    I am a late comer for this and so wondered if any more steam is left in this.
    Thanks and Regards,

  18. Dear Sir,

    Thank you very much for the encouraging comment. I beleive, this company will surprise us in a great way in the long run. From the high of 340 levels, surely its taking a breath now. Accumulation in small batches at falls may be the right strategy for this scrip,at this point of time.

  19. Hi Shabu,

    Of-late I was going through few agriculture sector stocks.

    I found few good companies which have the potential to give good steady returns in future.

    1.Kaveri Seeds
    2.Dhanuka Agrotech
    3.Insectiside India

    I went through their last 5 years performance.

    I found these companies are good in all aspects, may it be ROE, Steady increase in Sales & Profits, Promoter Holding, etc.,

    I think they are value buys compared to other stocks and are less risky.

    They seem give 25% to 70% returns CAGR in future.

    Please share your views.

  20. Excellent stock! I have got in at 53.95 and made a whopping 800% in 18 months and have still not sold a single share. I plan to add some more.

  21. i think its a great idea.....if someone is ready to take it up...I'd be ore than happy to find funding for it..:)

  22. Hello just thought i should post a comment on your blog.. Excellent site with unique content. This is twice now i’ve landed on your blog in the last days....:)

  23. Now we are in fast food generation. There is no doubt on that, fast food have brightful future. Shall we start fast food.



The blog is associated with information on Indian stock market and author’s investment view points on various emerging stocks/sectors. The contents discussed in this blog are purely my own personal opinion and in no case weigh it as any kind of recommendation for stock market investment. The sheer purpose of this blog is to educate the interested community on market related subjects based on my experience and I am, in no way, responsible for investment decisions based on the contents described in this blog.

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