Thread by @aditya942000

#Butterfly GANDHIMATI APPLIANCESThe co.

A small thread on how Co. hv changed over last few years🧵

👉With new & young mgt. they r aggressive in capturing market share

&

results r already visible.

@pd_log @mmvRavindra @SwarnashishC @AnishA_Moonka

https://twitter.com/Nigel__DSouza/status/1348477745567682560?s=20

👉Online sales contribute 20%+ of total Rev.

👉Co's products r bestsellers on FLIPKART

👉If u search for mixer grinder than on the very 1st glimpse you will notice 'BESTSELLER' bagde on Butterfly Rapid Mixer grinder

👉Same is the result with many other products like GAS STOVES & ELECTRIC KETTLES ETC.

👉Their Rapid Mixer grinder is among the lowest priced but Good quality products.

👉Their direct competitor PRITHI costs double than that of BUTTERFLY'S PRODUCTS

👉Daily there are an average 400-600 new ratings on RAPID MIXER GRINDER

👉Despite being a new entrant on E-COMM co has been successful in gaining market share & earn BESTSELLER badge.

Covid too has helped them as most of buyer hav started looking towards online retail.

👉Though co. doesn't share online contribution but last they mentioned around 20%.

🥘It has also launched many new products & r currently focusing on launching Premium products.

👉with the help of E-com they hv been able to spread their brand coverage to NON-SOUTH markets too.

👉They hv also inc their serviced network in Non-South markets.

👉With young mgt in control they have an aggressive target of reaching 1000crs of turnover by FY23 but internally they r sure to achieve this target quite early.

👉Despite increase in raw material prices they have successfully passed on price inc. & do not see major issue going forw.

👉Coming to Cash flow from operations:
They hv implemented a software across all its dealer network to track their inventory level at daily basis.

& In case inventory is struck with one dealer they channelize it to others

👉So that inventory doesn't get blocked

👉As a result they r able to inc ROI for their dealers which ultimately inc collection efficiency.

👉With inc. cash flows co. immediately reduced its debt & is now almost a debt free co.

👉With inc debt 16crs of benefit will directly flow towards the bottomline

Their Debtor days now stand at around 35 days & mgt is confident to sustain it.

👉They r so confident that they r even planning to inc capacity by investing 15-20crs

they already hv land in place & only need to Invest in Machinery.
which will give them additional topline of 130-150crs

& fr longer term (3-5yrs) they plan to acheive 1300-1400crs of TOPLINe

👉Now with inc. brand visibility Both through Online & offline channels they should be able to achieve the scale which they enjoyed in the past.

👉Despite Pandemic Co. has targeted to grow by 10% this year & it would with around 750crs of TOPLINE.

👍with Mcap of around 930crs its one of the cheapest among its peers which trades more than 2 times sales.

Although on P.E basis it looks quite expenses.

but with 1000crs of turnover co. is targeting to do +10% EBITDA LEVELS which r quite healthy.

👍& with the benefit of operating leverage if the co. maintains the current debt levels.

👍they can easily get 6-8% of PAT margins resulting in 60-80crs of Bottomline.

👉Roce - if they are able to achieve scale of 1000crs (which they will) then ROCE can spike easily to +20%.

👍Even a 2x M.cap to sales will give inc m.cap to Rs.2000crs

🚀Peers do trade at a lot higher premium

💸All this will result in great FCF generation since the do not need any large capex to grow

💥Their asset turn r as high as 6-7X

💵The co. has also dividend after a gap of 4years
which shows their intentions with minority shareholders

🍰Dolly Khana's Re-Entry is really an icing on the cake.

👌He is among the best to play momentum in earnings as well as in stock prices.

🔥with only 40 lacs shares available for Individual shareholders its gonna catch alot of scarcity premium when it becomes fancy.

🔥Stock is already 5X from the lows but it still hv a long way to go if management is able to execute as per plans.

at the end i would say that

Butterfly is quite good though not so sure for lifetime but definitely for sometime.

NOT A RECO.

After Dolly Khanna , another renowned investor

MUKUL AGARWAL has been silently acquiring Butterfly Gandhimati ltd.

Stake as on 31st March 2021 stands at 0.48%

With avg buying price Rs.430/share

Investment Value - 3.7crs

Source: Annual Report

@nid_rockz

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