Buy Hawkins Cookers; target Rs 1681: Firstcall Research

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Hawkins Cookers Limited is a
company in India which manufactures
domestic pressure cookers and
cookware.
The company has three
manufacturing plants at Wagle estate
Thane, Hoshiarpur and Jaunpur. It
manufactures under different brand
names of Hawkins, Futura, Contura
and Ventura.
The company is the largest cookware
manufacturer in India and exports its
products to more than 60 countries.
The company continued its efforts on
product development with more
emphasis on research and
development activity.
The Top line of the company is
expected to grow at a CAGR of 14%
over 2010 to 2013E respectively.
During the quarter, the company has
reported Net Profit increased to
Rs.93.27million from Rs.80.39 million
in previous year same quarter.

Hawkins Cookers - Sweet whistle: IDBI capital

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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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Consumption - A play on the evergreen, resilient theme: IDBI Cap

52 week BLOCKBUSTER: HAWKINS COOKERS ::Business Line,

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The stock of Hawkins Cookers came into limelight only in the latter half of 2009 when investors were hunting for consumer stocks. But since then, the stock has had a spectacular rally.

The Sixth Pay Commission bounty to government employees, higher support prices for food crops to farmers, and the well-being of the overall economy helped boost demand for consumer durable players including the kitchen appliance makers over the last few years.

Hawkins Cookers has seen its sales grow at 18 per cent annually over the last three years and net profits recording an annualised growth of 40 per cent.

Fundamental performance apart, a valuation in re-rating triggered the stock's dream run on the bourses. From a price-earnings band of 8-10 times in 2007, the stock's valuation had jumped to 20 times by 2010. It is currently at a trailing twelve-month PE of 50 times.

The rally in the price of Hawkins Cookers started much after the rally began in TTK Prestige. Investors who missed catching TTK Prestige at its low, fled to Hawkins Cookers, expecting it to run up on same triggers. This move paid off well. However, the company reported a drop in net profits for 2010-11, even as sales expanded, on the backs of it being unable to hold profit margins on increased input prices.