HSIL (HINDUSTAN SANITARYWARE & INDUSTRIES LTD): BEST ENTRY PRICE

In this Post we shall take a close look at HSIL and try and determine the Best Entry Price for the long term investor. HSIL, as perhaps most of us know, are Market Leaders in the Vitreous Sanitaryware and allied Bathroom Fittings segment and owners of the 'Hindware' Brand. The Company has been in business for more than fifty years and the Brand is a bit of a household name ,as it were.

Looking first at the TECHNICALS, we see a very positive Chart pattern on the 2-year Price Charts. Interestingly, on the 2 year Charts, the 200 DMA(SMA) is seen to be a terrific multi-year support, never having been decisively violated over the 2 year period. The closest encounter was on 9/2/2011 when it closed marginally below but smartly rebounded the very next day. Other than this, the 200 SMA has NEVER been violated on a closing basis in the last 2 years.!!! Currently the 200 DMA(SMA) is at 161.

Briefly looking at the FUNDAMENTALS we see that the Company has almost everything going for it; great Brand pull, Market leadership in its segment, a rapidly growing Demand Catchment zone and more significantly , the right vision to convert a plain-vanilla WC manufacturer into a spiffy Wellness product Major. Importantly, the Corporate performance has been excellent, with a projected 25% CAGR over the next 3 year period. Median Margins have also been excellent, in the range 18-22% over the last few Quarters and are guided to be sustained at similar levels in the future. At CMP 181 the Scrip is available at PE TTM 12X approx, which translates into a valuation of about 10x FY12E, which is fairly cheap.

Overall, in my opinion. the Stock is a BUY at CMP 181 and all dips in the 160-180 zone for the long term investor with conservative upsides of 25% plus.