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Saturday, June 30, 2012

Hanung Toys - (Indian) Success story in Toys Manufacturing and Exports!

We all firmly believe that Manufacturing is Chinese Forte and that Toys manufacturing is best done by Chinese companies. It would come as a pleasant shock that Hanung Toys and Textiles is a Indian listed firm which exports Toys and Furnishing to Global Firms such as IKEA, Wal-mart, JC Penny, Target, Sears and Metro Group. Hanung Toys is one of the world's leading companies in the soft toys category and exports globally to US, Canada, Germany, France, the UK, Sweden, Belgium, Russia, Austria, Poland, and Chile.

Hanung Toys & Textiles came into existence in 1991. The company started with collaboration with a South Korean company and even adopted the Korean name Hanung which means - Stem of Tree. The company started with a modest order of Rs 6 Lakh from IKEA. From there on, Hanung was on the growth path becoming the largest exporter of soft toys and then later diversifying into soft furnishing products. Hanung now manufacturers more than 11,000,000 pieces of soft toys and 1,250,000 furnishing sets per year.

Lets do some number crunching and fundamental valuation of this Indian success story in Manufacturing space:

Hanung grew from Rs 490 crore of annual turnover in 2008 to Rs 1395 crore of turnover in 2012. Earnings per Share improved from Rs 24.18 to Rs 45.93 in same period. Net profit has gone up from Rs 60.9 crores in 2008 to Rs 115.68 crores.

Cash flows for Hanung also present a impressive picture with firm ended 2011 at Rs 91.5 crores of Cash in hand. Book Value of Hanung is at Rs 200.21 per share, which has been steadily rising. Book Value (BV) was Rs 73.44 in 2007 and stands at Rs 200.21 in 2011, which is a sign of firm investing in itself, creating value for its shareholders and promoters and is generally a sign is a great firm in a great business.

Another impressive statistics to look at it Promoter's holding for Hanung, which has stealthily grown from 65.3% in 09/11 to 65.8% in next quarter, to whooping 68.35% in quarter ending 03/2012. this is a sign of promoter valuing his own firm and putting his money where his mouth is. If promoter is buying his own shares, so should you!

Hanung is currently trading at Rs 122 per share with 52 week low of Rs 76 and 52 week high of Rs 161 per share. At the current market price, Hanung is trading at a total market cap of Rs 307 crores, which is very reasonably low for a firm with Annual revenues of Rs 1395 crores and Annual Net profits of Rs 115 crores. At current valuation, P/E ratio is very low at 2.65 and EPS is robust at Rs 45.93 per share. 

Technically looking at charts, Hanung has hit a high of Rs 410 in yr 2010 and has a possible resistance at Rs 170. Once the scrip crosses Rs 170, it can trade in Rs 200 to Rs 250 range for a while, before hitting higher price ranges.

Thus, Hanung is a robust share with agressive growth and very low valuations at current market price. Very strong fundamentals and impressive growth story. This is definitely one MultiBagger stock in months to come!

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