Buy Butterfly; target of Rs 373: Firstcall Research

Firstcall Research is bullish on Butterfly Gandhimathi Appliances and has recommended buy rating on the stock with a target of Rs 373 in its August 22, 2012 research report.

“Butterfly Gandhimathi Appliances Limited is a four decades old company and Butterfly is a pioneer in premium stainless steel home appliances and markets its product with the Brand name “Butterfly”. Butterfly was the first in India to introduce stainless steel Pressure Cookers and Vacuum Flasks. Gandhimathi Appliances Limited' started business in the year 1986 mainly as a trading concern and the company was initially promoted by Sri V.M. Lakshminarayan and Sri. V.M Kumareason. Subsequently Sri Murugesa Chettiar and his other two sons namely Sri V.M. Seshadri and Sri V.M. Balasubramaniam also joined the company as promoters with equity stake. The Company was originally incorporated as a Private Limited Company on 24th February 1986 and was converted into a Public Limited Company on 25th April, 1990. The name of the Company has been changed from `Gandhimathi Appliances Limited' to `Butterfly Gandhimathi Appliances Limited' with effect form 25th October, 2011.”

“Butterfly Gandhimathi Appliances Ltd is a pioneer in premium stainless steel home appliances in India, reported its financial results for the quarter ended 30 June, 2012. The first quarter witness a healthy increase in overall sales as well as profitability on account, enhanced Showrooms, Service centers Distributor network and robust infrastructural Support system. The company’s net profit jumps to Rs. 47.67 million as against Rs. 33.45 million in the corresponding quarter ending of previous year, an increase of 42.51%. Revenue for the quarter rose 59.55% to Rs.1101.26 million from Rs.690.24 million, when compared with the prior year period.”

“The Company’s turnover has increased substantially in the last two years. Efforts are being made to sustain the achieved rate of growth in the coming years by enlarging the consumer base and penetrating to the western and northern Indian markets. However, the general economic scenario in the country looks pessimistic due to uncertainties over the purchasing power of the consumer on account of galloping inflation. The company’s taking into account the steps taken by the Company for establishing PAN INDIA market for its products and in anticipation of repeat orders from the Government of Tamil Nadu for supply of Mixer Grinders and Table Top Wet Grinders, your Company expects to sustain its growth rate. Better business control and ensure financial discipline, the Company has started implementation of the SAP system, which is expected to come in full swing during financial year2013-14."

"We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 373 for medium to long term investment,” says Firstcall Research report.

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