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Hawkins Cookers Ltd. is one of the major national players in the Indian pressure cooker market. It has a
strong brand in the kitchenware market with a significant presence in the Western and Northern markets
of India. Hawkins has diversified into cookware over the years and its Revenue/PAT had a CAGR of
18%/43% during FY07-11.
Investment Highlights
Major national player in the pressure cooker market
Hawkins is one of the two national players in the pressure cooker market in India. The pressure
cooker market in India is growing ~10-15% p.a. and there is an increasing shift towards the organized
market (~60% of the market). Hawkins being a national player is a significant beneficiary of the
growing pressure cooker market and increasing shift towards organized markets. Hawkins pressure
cooker segment has grown at a CAGR of 20% during FY06-11.
Strong brand name and wide spread distributor network
Hawkins is one of the earlier entrants in the pressure cooker market in the country and has built a
strong brand in this product category. It has a widespread distribution network with a strong presence
in the Western and Northern markets in India. The company in order to further penetrate the Southern
markets (where it has a lesser presence) has launched outer lid pressure cookers which have high
demand and this will enable future growth. We believe the company can also leverage its brand to
enter into other kitchenware products which can enable it to see high growth.
Revenue/PAT CAGR of 18%/43% during FY07-11
Hawkins had revenue CAGR of 18% during FY07-11 which was driven by the pressure cooker
segment. PAT had a CAGR of 43% during FY07-11 due to higher operating margins. OPM increased
by ~560 bps to ~13.9% during FY07-11.
High return ratios
Hawkins is a debt free company and has high return ratios. The return ratios are higher due to
negligible working capital and capital expenditure requirement. Hawkins reported RoE/RoCE of
75%/56% in FY11.
Valuations
Hawkins is one of the major players in the pressure cooker market in India. It has a strong brand and
large distribution network and can leverage it to become a complete kitchenware player in the
domestic market. We believe Hawkins can witness a high growth given its brand and ability to expand
its product portfolio. Hawkins trades at a PER and EV/EBIDTA of ~27x and 18.1x FY11 respectively.
We have no rating on the stock.
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