About The Company
Richa Industries Ltd. established in 1993 is a reputed manufacturer and supplier in the segment of dyeing, processing and finishing of knitted fabric and now it has shifted its focus to Pre-Engineered Building (PEB) business.
The company is headed by Shri Sushil Gupta an engineer by profession holding B Tech, M Tech qualifications from IIT- Delhi, Mr Gupta has been conferred with Udyog Patra and Udyog Vibhushan awards by The Govt. of India.
The company's textile clients include multi-national brands such as "Adidas, American Eagle Outfitters, Calvin Klein, BIBA, Classic Polo, Coldwater Creek, GAP, H&M, Kenneth Cole, Marks & Spencers, Macy's Inc, Matalan, Next, Puma, Reebok, United Colors of Benetton, SuperDry.
The PEB division of the company serves industries such as Warehousing, Industrial Manufacturing, FMCG, Automobiles, Cold Storage, Agriculture, Factories, Showrooms, Dairy & Pharma, Power Plants, Multi-storey Buildings, Heavy Engineering and Paper Industry. The PEB business has been flourishing and list of clients include "L&T, Asahi Glass, Various food processing companies and warehouses, Usher Agro, NRB Bearing, WIPRO, Bedmutha Industries, Crompton Greaves, Indiabulls and BHEL.
Richa Industries in July 2014 completed an iconic construction for Madhu Silica Pvt Ltd.
The constructed project is a silica processing plant for the company in Bhavnagar, Gujarat. Spread over 204514 sqft. the plant consists of 7 buildings with the tallest being 36 meters, it is one of the tallest PEBs in the country. The project was started in September 2013 and finished in just 10 months which helped Richa create a great image for itself in PEB division.
The Ace Investor - Value Pick
(BSE:532766) RICHA INDUSTRIES LTD.
Company listed on BSE has now changed its industry from Textiles to Engineering and Construction, Currently trading around 33 with a P/E of under 7, Market Cap is about 70 crores, Promoter holding is at 57.38%, Debt/Equity Ratio is at 1.71. Brickwork Ratings has recently assigned BB+ rating for Richa's bank borrowing.
Richa Industries Ltd. is engaged in textile and pre-engineered buildings business.
Even though the textile business of the company has been doing well and has a lot of multinational brands as clients, the company as reported by the media is in talks to sell-off their textile unit as they want to focus on the high-margin business of PEBs, The probable sale of the textile unit to a Kolkata based company at valuations of Rs.200 crore+ was recently in the news and the textile unit sale will make the company fully debt-free, which is currently around 180 crores.
Richa Industries Ltd has recently further diversified into turnkey solutions for PEBs.
Which means 'from planning to final delivery' customers can award projects to Richa Industries Ltd with a deadline for delivery. Richa with its brand value can now attract more orders by diversifying into turnkey solutions.
The MODI Govt. has ambitious "Make In India" plans and in all probabilities the plans are going to be successful, success of Make In India means huge boom in demands of warehousing, plants,manufacturing facilities which directly leads to a boom in demand of Pre-Engineered Buildings where Richa Industries Ltd is the only company certified with OHSAH 18001:2007 by IRQS.
It is a known fact that India ranked 66 among 105 countries in the Global Hunger Index 2012.
Due to the shortage of warehouses, unfortunately the hungry have remained hungry as grains and food is allowed to rot because of the warehouse and cold storage shortage crisis. If the MODI govt. wants to make any sense of the promises it made to the people, the hungry must get food and the wastage must stop. New finance minister Mr Jaitley has admitted that the current warehouse capacity is not sufficient and his govt. plans to strengthen the warehousing significantly in the upcoming budget with innovative ideas and plans. Richa perfectly fits the bill to get a lot of orders as it has already been working with a lot of private food processing companies for cold-storage and warehousing. Recently, PSU orders in the industrial space have started flowing to Richa then why not govt. orders for food warehousing?
As already written above, Richa's plan to sell textile unit already came into the mainstream media after which the stock rallied from 52wk Low of 19.20 to 52wk High of 44.70 in just two months giving us an idea on how positive a textile sell-off will be for the stock. However, even if we forget the sale of textile unit for the time-being, the debt of 180 crores is not such a huge number anyway.
Coming
to the financials, Richa Industries has shown great growth over the years especially after FY07 as it started its PEB operations, You can see the annual
results table below.
Particulars
|
FY05
|
FY06
|
FY07
|
FY08
|
FY09
|
FY10
|
FY11
|
FY12
|
FY13
|
FY14
|
Sales
|
24.97
|
40.92
|
63.49
|
99.32
|
147.76
|
174.56
|
228.58
|
301.41
|
269.60
|
276.50
|
Operating Profit
|
3.39
|
7.89
|
9.20
|
17.09
|
24.73
|
25.04
|
34.01
|
37.77
|
51.98
|
46.19
|
OPM
|
13.58%
|
19.28%
|
14.49%
|
17.21%
|
16.74%
|
14.34%
|
14.88%
|
12.53%
|
19.28%
|
16.71%
|
Other Income
|
0.04
|
0.07
|
0.13
|
0.35
|
0.77
|
0.76
|
0.32
|
0.76
|
1.82
|
1.04
|
EBIDT
|
3.43
|
7.96
|
9.33
|
17.44
|
25.50
|
25.80
|
34.33
|
38.53
|
53.80
|
47.23
|
Interest
|
0.98
|
1.59
|
2.30
|
5.34
|
10.55
|
9.59
|
16.22
|
19.70
|
23.35
|
22.56
|
Depreciation
|
1.03
|
0.93
|
1.29
|
2.94
|
3.93
|
4.78
|
5.50
|
6.90
|
7.50
|
6.09
|
Profit before tax
|
1.39
|
5.27
|
5.19
|
9.13
|
10.98
|
11.40
|
12.61
|
11.93
|
22.94
|
18.57
|
Tax
|
0.52
|
1.14
|
1.84
|
2.30
|
3.14
|
1.69
|
4.13
|
4.90
|
1.47
|
-0.29
|
Net profit
|
0.88
|
5.44
|
3.07
|
7.23
|
8.09
|
5.66
|
8.45
|
6.09
|
13.36
|
9.41
|
Adjusted EPS in
|
4.00
|
6.72
|
1.81
|
4.27
|
4.78
|
3.35
|
5.00
|
3.60
|
7.89
|
4.22
|
Cash EPS
|
N/A
|
N/A
|
N/A
|
6.01
|
7.10
|
6.17
|
8.24
|
7.67
|
12.33
|
6.95
|
Dividend Payout
|
0.00%
|
0.00%
|
0.00%
|
0.00%
|
0.00%
|
12.37%
|
8.28%
|
11.66%
|
5.31%
|
0.00%
|
As seen above the cash EPS of the company has been great and the company has paid dividend 4 times in the last 5 years.
With debt in check, good growth, strong order book, strong promoter holding and wonderful business prospects 'Richa Industries Ltd' is a multibagger gem trading at P/E of under 7, Richa can grow multifolds from here and it is not only a value pick it also is a Multibagger Pick, Which means target can be anything for this scrip above 150.
Recommend a strong multibagger buy on Richa Industries Ltd at current price of 33 with price target of minimum Rs 150 per share in long-term.
Note: Do not wait for correction to enter, Buy at CMP, Only genuine investors should enter our picks and short-term traders can stay away.
