Investment Note – Haldyn Glass Limited

I had shared an investment note with a few of my investor friends for their inputs and guidance about 6 months back. The stock is up 50% from the time of my investment note. Although I liked the prospects of the company (due to the reasons that will soon be clear), I was not too sure of its customers paying up (Kingfisher primarily) and some balance sheet vulnerabilities. Due to that, I had just taken a 2% allocation in the stock rather than more. In hindsight, I should have loaded up, but hindsight vision is always 20/20. So, no regrets.

The latest quarter results have been very encouraging. The year-end results indicate a 50% jump in EPS with a 66% reduction in debt. In fact, this stock came on my radar due to debt reduction. The other stocks that I am evaluating on this theme are Andhra Petro and Sanghvi Movers.

Disclosure: Still hold the shares bought in Nov’11. There has been some fraud to the extend of Rs. 16 cr (announced in Q4’12) that has presumably been written off against Reserves. Still evaluating. As of now, wouldn’t recommend fresh buying at these levels till some clarity emerges.

–Investment Note follows. This note was written in Nov’11 and hence will not reflect the latest figures. Views invited.

(Word document to download)

Investment Note – Haldyn Glass Limited – Debt Reduction theme

SUMMARY:

We have a

a) Severely undervalued company (the peers quote at much higher multiples, inspite of similar margins and return ratios)

b) Debt reduction (38% in just couple of quarters). Maybe more in the coming quarters.

c) Promoter buying

d) It is almost a debt capacity bargain (and the Graham number etc. is far above the CMP)

Views invited.

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  1. #1 by rajneesh on June 2, 2012 - 6:49 PM

    this stock has great resistence at 16-17 level.many customer who were trapped earlier may exit.
    1. already 40 bagger in 8 years.
    2. share holding pattern mildly bullish in last three quarter. put pvt corporate & other hands except promotor hand are buying.
    3. market cap 80 crore means 60-70 lacs are needed to mop up this much share.
    4. retail are exiting from this (good news)
    5. stocks are in hand of manipulators (price/volume pattern ) though it may not be roght time to exit this counter.
    6. promoter do collude with these manipulators ( see reverse split and split in 04 & 08 ) to facilitate price movement.
    7. profit/loss pattern for last 5 years is bit confusing and appears manipulative.
    any way happy ride for now

  2. #2 by Hemant on June 4, 2012 - 8:39 PM

    They haven’t made the adjustment in reserves.

    PAT is 24.3 cr. The dividend outgo would be 4.6 cr. The remaining 19.7 cr is added to reserves,which were risen from 55.15 cr to 74.72 cr,so god knows where they had done the adjustment.I had written a mail on 1st June,but till now no reply received..

  3. #3 by Vivek Gupta on September 21, 2012 - 12:26 AM

    Hi Kiran,

    I was tracking Haldyn and came across this article of yours. If u still track this co then please see if u could help me with the following problem.

    In annual results of 2012 co. mentioned about a fraud of 16 or 17cr. But this fraud has not been mentioned any where in the balancesheet. No adjustment seems to have been made for the amt in fy12 or Q1-13. The co says in the foot note that required adjustments for fraud have been made.
    Looks very distubring. On other parameters co look good.
    Would love to have ur opinion.

    Vivek Gupta

  1. On The Glass Containers Ltd

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