Book Partial Profit - HSIL

HSIL was recommended by us in our Issue 18 dated August 30, 2009 in the Analysis column at Rs 46.65. Post recommendation, the counter went up to hit its 52-week high of Rs 95.25, thus providing a return of 104 per cent, and currently the scrip is trading at Rs 89.09 which is 93 per cent above the recommended price. The reasons we recommended HSIL were that it commands 40 per cent of market share of the Indian ceramic market, attractive valuations and improving fundamentals of the company primarily due to better numbers of downstream companies like Pepsi, Coke, United Breweries and the real estate sector.

Though the Eurozone crisis has had its own repercussions, there has been a silver lining too. The fall in Euro has opened up various opportunities for a company like HSIL which is eyeing luxury ceramic brands, especially in Italy.

The management of the company has expressed interest regarding this and can acquire up to Rs 300 crore worth of brands without raising external funds. This will help the company to increase its footprint in Europe. As far as HSIL’s financials are concerned, the company has beaten the street expectation. For quarter ending March 2010, HSIL’s topline and bottomline grew by 50 per cent and 64 per cent respectively on a yearly basis. It earned profit of Rs 30.9 crore as against sales of Rs 264.45 crore for Q4FY10. Therefore, our suggestion is that you should book partial profits and stay invested in the remaining for more gains.