Harrisons Malayalam Ltd. Is a company mainly involved in the Food products division with a market capitalization of Rs. 1182 million and is listed with both the BSE and the NSE. The average daily volumes of the stock hover around 30000 – 33000. The stock beta is very close to the market movements at 0.87.
The financial forefront, the stock had displayed a very strong performance that has exceeded expectations. The operating profit and further The Company’s profit have grown by approximately 40 % and this has more than covered the loss incurred by it in the past year. Pat was Rs. 35 million against the last year loss of Rs. 39 million.
Such stupendous performance is attributed to higher price of rubber. The tea segment however did not recover from its depressing performance. The volatility prevailing in the tea market shall prevail and affect the profitability of the segment. Such lull prevailing in the tea segment was the major contributor in hampering a 3 fold growth of the company.
The top line rise was also supported by various projects undertaken within the engineering division. Using the DCF method, the company should be fairly valued only around Rs. 100. The EV / EBIDTA ratio expected in FY13 is 8.5.
‘Bell the Bull’ does not have turnaround expectation from tea markets but rubber should definitely drive the company to the path of growth in the coming times. The currents levels of Rs 60-65 is a good investment opportunity for a 2 year horizon.