Greaves Cotton
Greaves Cotton
The only Negative about this company is its sector. Engineering sector is down and out. Stocks will get badly beaten when FII decide to sell again.
It is a mediocre company, with a mediocre business but in the hands of excellent management.
The Management is level headed. They are conservative. They have NOT taken up any debt to increase business. They are only growing organically. The Sales have increased at a mediocre pace of 10%. Nothing special. However, ROE > 20%. Meaning, company is re-investing profits, using it as Working Capital. Essentially, the normal way of doing business.
In the last 8 years, it has not posted any negative figures And paid-off whatever little debt it had. Isn't that great!
This is a "Don't Worry-Be Happy" kind of a stock. It may not be a 10-bagger, but is likely to grow your capital at the rate of twice the FD.
It gives around Rs.2 of dividend every year. So, you could buy the company at say Rs.40 and get 5% Yield.
The company is small; 1/10th the size of Bhel. Therefore, is likely to swing wildly. And in one such down-swing latch onto it. This down swing is likely to come in couple of years. Don't hurry. Be patient to buy. Let the EPS fall for a few quarters and you will land an UNBELIEVABLE PRICE.
So, in Capital Goods/Engineering sector we have Short-Listed these stocks:
1) Bhel
2) Siemens
3) Cummins India
4) Engineer's India
5) Greaves Cotton.
All these companies have great balance sheets, great management at the helms, Nil debt, dividend giving and do not believe in capital intensive way of operating. I give them a thumbs up.
So, just wait for this sector to wallow in its lowest lows and then buy.