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HDFC securities gives 'buy' tag to this multibagger stock despite 350% rise in 6 months

Multibagger stock: The company strengthened its balance sheet by reducing debt of  ₹75 crore despite ongoing capex. Robust cash flow generation will further aid debt reduction, says HDFC Securities report. (Mint)Premium
Multibagger stock: The company strengthened its balance sheet by reducing debt of 75 crore despite ongoing capex. Robust cash flow generation will further aid debt reduction, says HDFC Securities report. (Mint)

  • Multibagger stock: HDFC Securities says that Globus Spirits has reported EBITDA margin expansion over past 6 consecutive quarters, with it reaching a high of 26.5 per cent in Q1FY22

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Multibagger stock: Globus Spirits share price has surged from 316.90 to 1439 apiece (at 2:24 PM today) in last six months — delivering around 350 per cent return to its shareholders in this period. However, with aggressive launch of products and widening geographical presence coupled with experienced management team, HDFC Securities believes that the brewery stock still has potential to give sharp upside movement and go up to 1761 per share levels in next two quarters.

Highlighting the fundamentals that may support this multibagger stock price to rise further, HDFC Securities report says, "Globus Spirits has successfully got transformed from a grain-based bulk alcohol manufacturer to a 360 degree alcohol beverage player. While the company’s manufacturing business (Ethanol/ENA) is likely to drive the growth in near term given huge tailwinds, the management’s primary focus is to expand its consumer business’ footprint, which we also believe is crucial for long-term success and stock re-rating beyond a point. With aggressive launch of products and widening geographical presence coupled with experienced management team, we believe GSL is well placed to ride on the rise in consumption of alcoholic beverages in India, driven by the underlying demographic advantage and the change in perception towards alcohol."

HDFC Securities report says that largest manufacturer and marketer of country liquor, is now ‘redefining’ country liquor in India, by creating new category called ‘premium country liquor’ or medium liquor, with the launch of India’s 1st ENA based country liquor brand – Nimboo.

"We believe medium liquor can be a game-changer going ahead. Besides, the company is also exploring opportunities for geographical expansion to achieve higher growth rate. Additionally, GSL has forayed into premium IMFL through its owned portfolio (under Unibev). Unibev is an asset light model focusing on high margin, low volume fast growing premium segment." the brokerage said.

On valuations of this multibagger stock picks, HDFC Securities report said, "Globus Spirits has reported EBITDA margin expansion over past 6 consecutive quarters, with it reaching a high of 26.5 per cent in Q1FY22. Stable working capital, lower cash outlay for tax due to availability of MAT credit and a reduction interest cost led CFO to improve to 148.4 crore in FY21 from 30.6 crore in FY19. The company strengthened its balance sheet by reducing debt of 75 crore despite ongoing capex. Robust cash flow generation will further aid debt reduction."

Advising stock market investors to buy this multibagger stock for six months time horizon, HDFC Securities report said, "We think the base case fair value of the stock is 1,619 and the bull case fair value of is 1,761. Investors can buy the in stock 1,454 to 1,482 band and add more on dips to 1,273 to 1,297 band."

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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