With 11x jump in profit, Dolly Khanna’s hidden gem rallied 684% in a year
The rise in stock price shows that an investment of Rs 15,000 last year has now galloped to Rs 1,17,586
Seasoned investor Dolly Khanna’s top bet Butterfly Gandhimathi Appliances has jumped over 7.5x last year. The stock which was trading at Rs 108 on May 28, 2020, has rallied 684% and is now quoting at Rs 847. The rise shows that an investment of Rs 15,000 in this stock last year has now galloped to Rs 1,17,586.
Dolly Khanna added 17,000 shares to her portfolio in the March quarter taking her stake in the company to 1.59% from 1.5%. As of yesterday’s closing price her stake in the company is valued at Rs 24.15 crore.
Fantastic Financials
For the quarter ended March 2021, the Chennai-headquartered firm reported strong revenue and improved profitability aided by the favourable base. Revenues in Q4FY21 grew 86% year on year to Rs 207 compared to Rs 110 crore in the same quarter of the previous year. The company posted a profit after tax of Rs 8.9 crore compared to a net loss of Rs 7.7 crore in Q4FY20.
On an annual basis also, the company declared robust numbers with its revenue increasing to Rs 870 crore in FY21 from Rs 679 crore in FY20 registering a growth of 28%. Whereas its bottom line grew at a much faster rate swelling 11 times from a mere Rs 3 crore profit in FY20 to Rs 36.7 crore in FY21.
The healthy growth came in on the back of enhanced customer interest in kitchen appliances due to accentuated preference for home-cooked food. Besides higher demand for its product the company also improved its operating which is reflected in the balance sheet as the debtor days (average number of days required for a company to receive payments from its customers) has reduced from 102 days in H1FY20 to 37 days in FY21 owing to adoption of real-time inventory tracking at the dealer level, successful implementation of bill discounting facility. This initiative helped the company to bring down its short-term borrowings to zero from Rs 127 crore in the previous year.
Should you buy?
Brokerage firm ICICI Securities maintained has a ‘Buy’ rating on Butterfly Gandhimathi Appliances with a price target of Rs 1,000 implying a potential upside of 18%. “Efficient working capital management and healthy operational performance have led to return on equity expanding to 16% in FY21. The company is planning a capex of Rs 30 crore to enhance the plant capacity. This would enable the company to have a peak revenue potential of ~ Rs 1400 crore over the next few years. Expect revenue CAGR (compounded annual growth rate) of 17% in FY20-23E and expect EBITDA margins to increase to 11% by FY23E,” said the brokerage firm.
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