Tilaknagar Industries has target of Rs 80: PN Vijay

PN Vijay, Portfolio Manager is of the view that Tilaknagar Industries has target of Rs 80.

Vijay told CNBC-TV18, "Tilaknagar Industries is an FMCG stock and their claim to fame is that the manufacturer and the market mansion house, which is a very strong mid market Whisky brand. They also introduced Madeira rum which is also if you see the IMFL (Indian Made Foreign Liquor) market in India, Whisky is the big market share followed by rum."
He further added, "White liquor, Gin and Vodka take a smaller share, they are more used as cocktail mixes. Madeira introduction has been successful, that's been ramping up a top line growth of about 45-50% in last two quarters. The whole business has got a CAGR of something like 23-25% last 6 quarters, which is very impressive considering that the IMFL industry in India is growing by about 10-12%."
"They are entering big markets like Maharashtra and Andhra Pradesh. Entering a new state is quite tough for liquor companies because there is plethora of state government approvals, taxing excise duty for liquor companies as a state subject. They have made this entry and it will improve their growth."
"Another thing about Tilaknagar Industries is the CSDs (canteen sales depots) which is the army centralized procurement arm, it is a big thing for any company, FMCG or liquor company to enter the CSD. They have managed to do that and the affect is visible in the last one year."
"In terms of valuations, they are quoting at something slightly 1.2 times market cap to sales, which is very low for any FMCG company. Just for comparison, for Hindustan Unilever it is a 6 or 7. There are no great risks to the business because it is a wise industry; the balance sheet is quite okay unlike United Spirits."
"It is quoting at a very nice price of around Rs 52-53 which is attractive to small investors. I am giving this a target of about Rs 80 in next 12-15 months. I don't see any great risk in this stock." Disclosure: It is safe to assume that the stocks discussed have been recommended to clients but no personal holding.