HAWKINS; 'SEETI BAJEE' (BEST STOCK ENTRY PRICE)

HAWKINS COOKER is one of the oldest and better trusted names known to every homemaker for decades. Quickly moving on to its Market performace we see that at CMP 1617 it is trading at roughly 27 PE (TTM) and has seen a 52 wk high of Rs 2117 & 52 wk low of 827 on the BSE.

A close look at the TECHNICALS reveals that its Market price  has seen a huge uprise of about 80% in the last 6 months itself!!!! Now if we analyse the 5 year Charts for the Scrip we see that the 200 DMA on SMA basis , at 1226 is a fairly reasonable support. I say reasonable because during the 5 year period it has been violated a few times but decisive violation is for the period 27/1/2011 to 7/4/2011. However this does not look very convincing as a support level so we look at a 400 DMA over a 5-year period. Here we see that the 400 DMA over a 5 yr period is a MUCH BETTER support for the scrip not having been decisively violated even once during the past 5 years. The aforesaid 400 DMA is at 1115 approximately and seems a good support for the long term'

Now if we look at the FUNDAMENTALS we see that HAWKINS in terms of Results has been a steady performer of late, but there have been definite hiccups earlier. I mean, nothing spectacular in the growth trajectory to warrant the 80% increase in the Scrip price in the last 6 months. So to make a short point HAWKINS at CMP 1617 seems very much overpriced. I feel that fundamentally the Company has not been able to reposition itself as a 'complete kitchen solution provider' despite having a good product and fairly strong Brand Pull.. Thus the growth visibility is not very evident which makes me a little apprehensive about the Stock being able to sustain its Market performance in the long term.

But then everything is good at a price and in case one wants to enter this Stock, entry can safely be made at levels of around 1150 (which is close to the solid 400 DMA on the 5yr Charts that we mentioned earlier). This roughly corresponds to a PE (TTM) of about 20 which is what I feel the Stock deserves. Of course the current appetite of the Market for the Consumption theme could mean that the Scrip will not reach 1150 in a hurry so it may be worthwhile to make staggered entry 5-10% higher ie at around 1200-1250 levels and then average out downwards.

So in my opinion, initial entry can be made around 1250 with fair price of the Stock currently being around Rs 1150 max.

PS: There are better scrips in the Market in the same space with more visibility in earnings growth, such as TTK PRESTIGE. which I will examine shortly in a forthcoming Post, for determinjng the best entry price.