Timbor Home Stock Analysis: Only listed Indian firm in Modular Kitchens!

Timbor Home is an Indian manufacturer and retailer of Modular Kitchens, Solid Wood Furniture and Doors. Timbor is the only listed Indian firm focused in Modular Kitchen space, which is an aggressively growing niche space in view of increased spending by Indians on their homes and kitchens. The modular kitchen space is expected to grow at about 50% YoY for the next few years. Timbor has about 20% market share in India in branded modular kitchens.

Timbor started small in year 2000, and has grown aggressively to about 130 stores across 80 cities in India. It’s an integrated furniture company with its own plantation, wooden treatment facilities, manufacturing plants as well as retail stores. The firm markets its products under the brand names Timbor Cucine- Modular Kitchens, Timbor Doors- Doors & Door Frames, Timbor Home- Home Furniture, and IKI Kitchens- Hi-end kitchen solutions using 'Hettich' Hardware and accessories.

IKI Kitchens is a new concept and through IKI Kitchens, Timbor is bringing the 'Intelligent Kitchens' concept to the Indian kitchens. SIDBI has recently invested Rs. 6 Cr in Timbor Home and the funds raised will be used to set up 30 high-end 'IKI' kitchen stores across India. Timbor has three manufacturing units located at Changodar, Ahmedabad, at Vatva, Ahmedabad, and at Umreth, in Anand.

Timbor Home had raised Rs 23.35 crores through IPO by issuing 3.69 Mn shares at a price band of Rs.54-63 per share, by diluting 25% stake in June, 2011. The firm set the issue price of its IPO at Rs 63, and currently it is trading at Rs 27.4, which is 57% discount to its IPO price.

Timbor has a topline of Rs 81 crore revenues in year ending 2012, which is good growth from Rs 19.5 crores revenues in year ending 2008. Book value is at 32.44, so current price is trading at about 15% discount to Book Value.

Promoter ownership is at 47.6%, and retail public owns about 22% of stock currently. Currently, this 80 crore annual revenues firm in a niche space is available at decent valuations of Rs 40 crore of market cap. With opening up of Retail space in India, firms like Timbor with 130+ stores will get a upward fillip and can get re-rated.

Technically speaking, stock price has been in a range of Rs 20 to Rs 40 from past 1+ year. Good trading strategy would be to buy at lower end of this range and sell part of your holding at higher range. Nearby support levels are at 26 and 22.5 respectively. Nearby Resistance zones are at 30.5 and 38 respectively. Once 38-40 zone breaks with good volumes, firm will reach uncharted price territory and is definitely a good stock to hold for medium term price appreciation.