Book Partial Profits

Hawkins Cookers formed a part of our recommendations in our Issue 25 dated November 23-December 6, 2009. The scrip was recommended in our column Choice Scrip at a price of Rs 625 with a one year price target of Rs 778. Factors such as consistent performance both in the topline and bottomline, five year CAGR growth in profits driven by realisations and volumes, strong brand recall, a dividend track record of 19 years with a dividend yield of 3 per cent, low debt status and last but not the least, the low valuations formed for the many reasons that had made us recommend this scrip to our esteemed readers. And with the catching up of the valuations that the scrip has done, Hawkins Cookers has actually outperformed our expectations. It should be noted that since our recommendations the scrip has touched a new high of Rs 945, yielding an overall appreciation of 51.2 per cent, while at its CMP of Rs 916 the scrip still provides a strong appreciation of 47 per cent. The Sensex, during this period, has been up by a mere 4.4 per cent, thus indicating a clear outperformance by Hawkins Cookers. Though the scrip has gone past our target price, we would recommend investors to book partial profits but hold the rest for a longer term as the scrip gives the investors the best of both worlds, i.e. consistent dividends and capital appreciation. Besides, with the second quarter usually stronger, Hawkins Cookers may surprise investors with better than expected Q4FY10 numbers. Considering the fact that the scrip is still available at FY10 at a PE of just 12x, the scrip is geared to move further ahead from its current levels.