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Laxapana Batteries - A New Begining

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Laxapana Batteries - A New Begining

Post by EquityChamp on Thu Feb 11, 2016 8:24 pm

First topic message reminder :

Background
The company was a dedicated torch and transistor battery manufacturing company in the past. However the company diversified into a new product range considering the market dynamics and doing so now marketing LAXAPANA brand zinc chloride & alkaline type AA and AAA batteries, CFL bulbs and safety wax matches and sanitary napkins under LILY brand name and also introduced a LAXPANA brand re-chargeable torch to the market.

Company Performance
Since the new product launch the company has achieved a remarkable revenue growth recording a significant revenue growth of 81% in FY14/15 with a PAT growth of 46% in the same year, however the company experienced a decline in profit margins due to new product development costs. With the realization of incremental revenues the margins are likely to improve over the next couple of years. Company NAV as at 30th Sep 2015 was Rs4.32. The ROE has improved to 8.7% in FY14/15 and remarkably improved to 20% during the first half of FY15/16.

The company is a relatively geared company where 45% of total assets were financed through borrowings. However the accumulation of positive operating cashflows will help the company to reduce the debt component gradually over the years to come.

According to the 1H results, the company is likely to achieve a revenue of Rs380mn for FY 15/16 and Rs540mn for FY16/17.Assuming a constant profit margin the estimated bottom line would be Rs33mn for FY15/16 and Rs47mn for FY16/17.

Opportunities and Challenges
The company's new product range is very much suited for modern day retail energy demand hence an investor can expect over 25% annual growth rate for the next few years. Probably the company will enter into the production of rechargeable batteries which goes in tandem with alkaline batteries.

However the new product range is to face stiff competition from both local as well as imported brands. Especially the imported brands will pose a significant challenge given their lower prices. However by offering a quality and durable product at a reasonable price should be enough to meet this challenge which is the focus of the company at the moment.

Valuations
Given the forecasted earning the share is currently trading at a forward PE of 9.3x @ a market price of Rs7.90 based on FY15/16 earnings and at a forward PE of 6.6x based on FY16/17 earnings. If the stock to trade at a 50% discount to sector PE the stock could be valued over Rs11.50 (based on FY16/17 earnings). Furthermore it is the company's policy to declare more than 50% of the profits as dividend so investors can expect a DPS of 50 cents for FY15/16 and a DPS of 70 cents for FY16/17.

Recommendation
Considering the huge growth potential of the stock backed by a high DY and low liquidity of the stock (only 39mn shares in issue) I recommend this is a BUY stock. The current depressed market may provide investors the golden opportunity to grab even for a lower price than the current price.

Thanks
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Re: Laxapana Batteries - A New Begining

Post by pure equity on Wed Aug 17, 2016 1:11 pm

E C sir pls tell me about lite in this condition.  thanks

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Re: Laxapana Batteries - A New Begining

Post by pure equity on Sat Aug 20, 2016 6:37 pm

E C sir  still i am holding  this shares . i bought it last year.  i think company's  growth still good. is it wise to wait couple of quarter?    thanks

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Re: Laxapana Batteries - A New Begining

Post by EquityChamp on Sat Aug 20, 2016 10:50 pm

pure equity wrote:E C sir  still i am holding  this shares . i bought it last year.  i think company's  growth still good. is it wise to wait couple of quarter?    thanks

As you can see based on 16/17 earnings my price expectation was above 11.50 and it has achieved through. This is the true value of this stock and I am glad that finally people have realized that. I need to see how this stock to be valued based on FY17/18 earnings but for now the current price seems to be fairly ok. It is no harm you holding this for some more time.

Further you can see that Rs8-9 was the long held resistance level for this stock but with this week's resurgence it has form a new resistance at Rs11 so be happy and enjoy how your investment delivers return for you. Now you have to see the prices in 2018 or 2019 not next year as it is quite certain now as what will be the price going to be.

Thanks and GL.

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Re: Laxapana Batteries - A New Begining

Post by pure equity on Sat Aug 20, 2016 11:12 pm

thanks E C sir. but NAV is below 5 rs. so  share price may be little bit come down ?

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Re: Laxapana Batteries - A New Begining

Post by karuna on Sat Aug 20, 2016 11:27 pm

Lite .n can get a profit too long termly . But I hope better to exit now . Because we cannot guarantee it will make profit next year.  

It's function with interm financial results and asi number 5800 to 6600 asi 800 units use for 8 to 12 
Probably why they stay until financial report.  

However journey is happened 12 may be not necessarily to buy . if you brought 12 u had to stay another 400 or 500 units for sell above 14/15 with there beta base sometime.  

So I hope better to follow some other fundamental share.

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Re: Laxapana Batteries - A New Begining

Post by EquityChamp on Wed Aug 31, 2016 9:31 pm

When I picked up this stock it was 7.90. Then with the capital gain saga it slipped to below 7/- as well. But after six months now how it looks like. Has established my value targets and stay above that. Also gave a handsome dividend of 50 cents. Total return for an investor who bought @ 7/- would be 79% in six months. (capital gain Rs 5/- + Dividend 0.5/-)

These are the matters to be discussed in public forums. Investors should know the value gaps . But mostly things which are in discussion in this forum are speculation and manipulation in nature. Fundamental discussions are very rare. Sad to write this.
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Re: Laxapana Batteries - A New Begining

Post by Eng Krishantha on Thu Sep 01, 2016 12:07 am

EquityChamp wrote:When I picked up this stock it was 7.90. Then with the capital gain saga it slipped to below 7/- as well. But after six months now how it looks like. Has established my value targets and stay above that. Also gave a handsome dividend of 50 cents. Total return for an investor who bought @ 7/- would be 79% in six months. (capital gain Rs 5/- + Dividend 0.5/-)

These are the matters to be discussed in public forums. Investors should know the value gaps . But mostly things which are in discussion in this forum are speculation and manipulation in nature. Fundamental discussions are very rare. Sad to write this.

true..
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Re: Laxapana Batteries - A New Begining

Post by Teller on Thu Sep 01, 2016 12:41 am

LITE is one of good analysis from EC.
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Re: Laxapana Batteries - A New Begining

Post by lal62 on Thu Sep 01, 2016 7:27 pm

I am a new comer  to the forum and was  in search of a site to read sound and unbiased stock market  analysis ( discussions) , Seen and read quite a few So far , like to mention that obviously  EC stands well above , and thanks for being so.
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Re: Laxapana Batteries - A New Begining

Post by EquityChamp on Thu Sep 01, 2016 10:05 pm

Welcome lal62 to the forum. As an early advise want to say that 90% talks going in this forum are speculative promotions based rather than discussing plusses and minuses of individual stocks. It is not like the past and at the moment the past glory had diminished alarmingly. So you need to think and digest more than normal course of action about most of the discussions happening here otherwise you can be a victim of a trap.

Good luck for the future.
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Re: Laxapana Batteries - A New Begining

Post by lal62 on Fri Sep 02, 2016 1:17 pm

Then new to the market couldn't avoid  myself  burning the finger in 2008  ,after few years  returned back with bit broader understanding and still survive as my thing is only medium to long term  .I appreciate your  advice and comments , Thanks ,your statistics speak  volumes of the true state of affairs in the market.Then again,   fundamentally sound stocks when they are low is a safer way for me to handle at the moment , I guess
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Re: Laxapana Batteries - A New Begining

Post by EquityChamp on Sun Apr 09, 2017 9:41 am

It's truly a new beginning for LITE. Within a year for an investor who bought @ 7/- or 7.50 have two dividends. 55 cents and now 77 cents. The stock is trading at 11.80 as at 7th April. Dividend yield alone is close to 20% within one year and capital appreciation is more than 50%. Its at the very correct time I have revealed this stock in this forum. cheers
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Re: Laxapana Batteries - A New Begining

Post by kassachandimal on Tue Apr 11, 2017 7:00 am

Mr.EChamp what is ur idea about RICH ?

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Re: Laxapana Batteries - A New Begining

Post by EquityChamp on Wed Apr 26, 2017 10:17 pm

Surpassed 12 as well. Are there any winners from LITE?
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