CategoryInvestment ideas

About
Patels airtemp is in the business of condensers, heat exchangers and air conditioners. The company is in the same industry and business space as Blue star limited which is a better known company. You can find more about the company here

Financials
The company has been business since 1973, but has started doing well for the last 5 years. The ROE of the company has increased from 7% to around 30% in 2009. The company is almost debt free and may have some excess cash by the end of 2010.

The company had a revenue of 72 Crs and 8.7 cr net profit in 2010.

Positives
The company has grown its topline by more than 30% and bottom line 40%+ in the last 6 years. However at the same time the growth has come from extremely small base. The company has paid off its debt and is now debt free.

The company has a fairly diverse clientele and supplies its products to a wide variety of industries such as cement, chemicals, petrochemicals, textiles and engineering. In addition the company has the benefit of an ever expanding and growing market for its products.

Risks
The company is in a very competitive business with competitive advantages related to scale of operations. A substantial portion of the business comes from projects which involves competitive bidding. The company has started growing in the last few years and it remains to be seen if the company will scale up and enter the big leagues.

The current margins are in the range of 10%+. Blue star which is in a similar business has margins in the range of 5-7%. The ROE for both the companies is in the same range as Blue star is a more efficient user of capital compared to Patels airtemp. The efficiency is mainly to the size of the company. The difference in margins could be due to the pricing/ quoting approach of the companies.

If blue star is more aggressive in bidding, then we are likely to see Patels airtemp follow the same path if it intends to grow beyond the current size. If this happens, we are likely to see a reduction in net margins, though the bottom line could still grow with the topline.

Conclusion
One can look at the financials of the company and assume that patels airtemp would continue to grow at the same rate. If one can make an assumption or have a strong reason to believe that the performance of the last 4-5 years will be repeated then the company is a bargain.

At the same time, one should also consider the fact that the company has been in the biz since 1973 and managed to grow to just 16 crs in the first 30 yrs. The rapid growth and improvement in the performance has come in the last 6 years.

I personally have not been able to make up mind on which scenario will play out and plan to follow the company and dig deeper. It is easy to assume that the company will repeat the performance of the last 6 years, declare the company to be undervalued and buy into it. I however would prefer to investigate deeper and watch the company for a while before buying into it.

Let’s start with a premise. Let’s say you believe as I do, that India and its economy is likely to do well for the next 10-15 years. I think it would be safe to assume that the Indian economy would grow between 5-6% for the next 10-12 years.

If you agree with the above point, the nominal growth (real growth – 6% + inflation) is likely to be in the region of 10-12%. If the nominal growth of the economy is 10-12%, then the top companies in India are likely to grow at the same or slightly higher amount over the same period of the time.

The top companies in India are represented by the Nifty 50 or BSE sensex and hence we can expect that the index would grow by 10-12% over the next 10-15 years. It is quite possible that the returns will fluctuate wildly from year to year, but over the long term the returns are likely to average more than 13%. The actual returns for the last 15 years have been around 13-14% when the growth rate of the economy was much lesser.

If you agree with my logic above, then this is my idea –
If one invests in the index via a systematic investment plan (SIP) in a low cost ETF or mutual fund on a monthly or quarterly basis, the overall returns should be fairly good with moderate or low risk over the next 10-15 years.

So where’s the catch
There a two issues. The first issue is discipline. A lot of people equate excitement with high returns and end up with low returns and lots of disappointment. As a result, due to ignorance or mistaken beliefs, they will not follow a simple and sensible plan which could provide good returns at low risk.

The second issue is the validity of the hypothesis that India will do well and not go down the drain. For starters, if it does then all of us will have more to worry than the stock market alone. I sincerely hope that it does not happen, otherwise all bets are off

So are you doing this ?
If I could go back in time and meet the Rohit of 1990’s, I would kick his ass and ask him to start an SIP program in the index or a decent mutual fund instead of chasing some IT stocks. Well, I can’t do that :). So I have done the next best thing – I have an SIP plan for the last couple of years and have kept at it irrespective of the market levels, near term outlook and any other forecasts and prophecies.

I have discussed this approach with several of my friends and have yet to meet anyone who has taken up my suggestion. I think there is a perverse thinking that decent returns require some complex insight and a simple ideas such as this is too good to be true.

About
Facor alloys is in the business of chrome alloys, which is used in the production of steel. The company has a capacity of 70,000 MT (industry capacity – 7 lac MT) and is located in Andhra Pradesh. The company emerged from a demerger of the FACOR group in 2004

Financials
The company was created by the demerger of the FACOR group into three companies, one of which was Facor alloys. The company had accumulated losses and underwent a restructuring exercise during the initial years. The current promoters for the company injected funds into the company and the debt was also restructured in the initial years
The company has since then turned around its performance. The debt has been wiped off and the preference capital has also been paid off. In addition the company, now has cash balance in excess of 30 crs which is around 25% of its market cap. The company has more than doubled its topline in the last 6 years and net profits have gone up considerably too. In addition the asset turns have reduced and Working capital turns have remained steady. All in all the asset efficiency has improved in the last 6 years.

Positives
There are several positives for the company. The company has a strong balance sheet. In addition the steel market which is the consumer industry for the company’s product is growing in excess of 7-8% and hence the company should see adequate demand for its product.
Chrome ore and power are the key raw material for the company. The company has ample cash on the books which it is planning to utilize to invest in a group company to access captive power. In addition the company is also in the process of acquiring chrome mines to gain access to reasonable priced ore. These two developments should provide some hedge to fluctuations in the price of the end product.
The management has also been sensible in allocating capital and has turned around the financials of the company. The company also has accumulated losses which should help in reducing the tax outflow and improve the cash flow for the company.

Risks
The company faces a lot of risk. The industry in which the company operates is a price competitive commodity industry. This industry has low to non-existent pricing power and minor competitive advantage from scale of operations. Due to the nature of the industry, most companies in this industry are unlikely to make high returns over a business cycle.
The company is a much smaller player with exports to various markets across the world. However the Chinese market has considerable impact on the steel demand and hence any slowdown in china could hurt the company, both directly and in-directly.
The company was re-structured in the past and has worked to turn the business around. Although small, there is always a chance that the performance could turn south again

Competitive analysis
The industry is a competitive, commodity type cyclical industry. There are a lot of small companies in this industry in india. Finally the Indian companies are at a cost disadvantage with respect to their south African competitors who have access to low cost power and better ore quality.
The pricing in the industry is determined by the demand supply situation and is also based on the mid to long term contracts with the steel manufacturers.

Management quality checklist

– Management compensation : fairly reasonable at less than 1% of sales
– Capital allocation record : fairly good for the last 6 years
– Shareholder communication – average
– Accounting practice : appears conservative
– Conflict of interest: none that I could see. The company has access to low cost ore from sister company
– Performance track record : appears good for the last 6 years. However industry economics are bad

Valuation
The net margins and the topline growth of the company maybe at a cyclical high. The fair value of the company is between 7-10 if one assumes that the normalized margins are in the region of 6-8% and the growth will average 8-10%. The reason for having a range is that it is difficult to pinpoint a single number as ‘the’ margin or topline growth and peg a fair value to it.
In terms of comparison to other companies in the sector, the company is selling at a 30-40% discount to other companies in the sector.

conclusion
If you search the internet on this company, you are likely to find this stock being touted the next microcap to make you rich. I have seen price targets ranging from 12-15 rs in the next 6 month. The geniuses giving these price target don’t know what they are going to eat tomorrow, but know what the stock price would be. It is still debatable who is the bigger idiot – the one giving the price target or the one acting on it.
I have personally created a small starter position in the company as I am now focused on learning and analyzing small cap and commodity type companies. These companies involve a different approach and mindset. The stock price is very volatile due to the nature of the industry and the size of the company involved. As a result, my estimate of fair value is not more than 9-10 in the best of the circumstances.
The stock can provide decent returns if the demand supply situation remains stable in the next 1-2 years and the company executes well. However, as I said before, if you want to build castles in the air and daydream then there are a lot of geniuses in the market ready to sell you a nice price target.

I had analyzed sulzer here. I had written the following

Sulzer has tried to delist the company in the past and current holds 80% of the stock. I will have to stretch my imagination on the point, that the company will suddenly start looking at improving the returns for the minority shareholder. In such a scenario, it is quite difficult to put an appropriate number on the intrinsic or fair value of the company.

Well, one part of the comment came through – the company announced delisting yesterday. I had also written that it is difficult to put an appropriate number on the fair value. That did not stop me from evaluating the stock. I have uploaded a detailed analysis here.

I typically use this spreadsheet to do a detailed analysis of a company to ensure that I am evaluating the company from all aspects (I need to get a life !!)

My fair value estimate of the company is between 1250-1300 and it remains to be seen if the stock will appreciate still further in response to the delisting offer. You can read the guest post by ninad on the delisting framework here.

I have been building a position in this stock for quite some time now and have built a 60% position ( I am too slow !!). I am definitely pleased with this outcome. The stock however is now a delisting play and my approach will be different. It is likely I may exit the stock if the price approaches my estimate of fair value

An offer to my broker
I recently opened a new account and have a new broker. The broker is quite good and provides me good service. To appreciate the business he gets, he has been sending me 4 line stock recommendations. For ex: One of the recent recommendations was Tata motors.

I could not believe that someone would buy a stock based on a 4 line recommendation – apparently quite a few do. I think people do more research when buying a pressure cooker than a stock !

My offer to my broker is (in jest) – if you don’t give me advise and don’t send me recommendations, I will give you 1% extra commission on my trades

I have written about the cement industry in the past (see here, here and here). You can download a detailed analysis of the industry from here (see file – Business analysis_working_aug 2007.xls, column for cement industry).

I had the following in an earlier post

Considering the level of undervaluation in some sectors such as pharma, IT etc and the better economics enjoyed by those industries compared to Cement, I am personally not too keen on investing in the cement sector. If I had to pick up one cement company to put my money in for the long term, I would prefer ambuja cement.

When I wrote this comment, I did not realize that it would turn out to be this accurate. IT and pharma stocks (the don’t touch sectors of 2007-2008) have done much better than the cement industry stocks. Note the word stocks and not the industry. As I have said in the past, a good and well performing company or industry is not necessarily a good stock and vice versa.

I have been running various filters to come up with new ideas and it has been slim pickings. The filters recently threw up some cement companies, so I decided to an analysis of these companies again . A short review follows

Mangalam cement
This is a birla group company with a capacity of around 2MT and caters to the northern market. The company currently has a net margin of around 15% and an ROE of around 30%. The company also has surplus cash on its books
The company however has been a BIFR case in the past (2002-2003). The company has since then been able to turn around its performance by restructuring its debt, reducing its cost structure (by generating power internally) and was also aided by the rise in the demand and pricing for cement in the last 5 years.
The company now plans to expand capacity by around 1.5 MT at the cost of 750 crs. The company sells at around 300 crs, net of cash and at a PE of 2-3. In addition, the company is also selling at 25% of replacement cost.

Ambuja cement
This is one of the top companies in the industry with an installed capacity of around 22 MT.The company has generally maintained an ROE in excess of 20%, net margins in excess of 10% and fairly low debt equity ratios.
The company has one of the lowest cost of production in the industry and is a well managed company. The company sells at around 11-12 times PE and around 610 Crs/MT of capacity.

Additional thoughts
The cement industry is a commodity industry where the profitability of the players is driven by the demand supply situation and the resulting cement pricing. The demand growth is now at around 8-9% and picking up due to revival of the economy. However at the same time, a lot of additional capacity is scheduled to come online which may add to the pricing pressure.

To look at the same dynamics in a different way, the current profits per MT of cement is around 70 Crs. The average profitability is generally around 40-50 Crs per MT of sale. As a result the current profits are around 30-40% higher than average. Any increase in capacity or slowing down of demand could impact the margins and net profit for the industry.

The second tier companies such as mangalam, JK cement etc look attractive at current valuation. However such companies typically sport low PE ratios at the peaks of business cycles or peak pricing. As a result, I have yet to make up my mind if the above companies are truly undervalued. Maybe a good time to buy cement stocks was a year back, but then one could have bought almost anything then and made money by now.

Disclosure: no current holding, only extensive reading. As always if you buy based on my analysis, blame yourself 🙂

About
Tata sponge ltd is a 676 cr sponge iron manufacturer with an annual capacity of 3.42 Lac MT. The company uses iron ore and coal as the raw material, which is used to produce sponge iron. Sponge iron is an important raw material for the manufacture of steel and the price for sponge iron in turn depends on steel demand and pricing.

The company is a part of the Tata group, which holds a 40% stake in the company through Tata steel. Tata steel also supports the company, by supplying iron ore. In addition the company has purchased and is developing coal mines for captive use and to control input costs.

Financials
The company has revenue of 676 crs and has recorded an average growth of 15%+ in the last 10 years. The bottom line is around 105 Crs with a growth of 20%+ in the last 5 years. The key point to note in the performance is that quite a bit of growth in the topline and bottomline has happened in the last 5 years.
The net margin of the company is currently at 17%. However the net margin has fluctuated between 4% and 17% in the last 10 years. These fluctuation are closely linked to the steel demand and pricing and has generally fallen when the overall economy has slowed down.
The company has now become a debt free company and has a cash holding of around 115 crs on its balance sheet.

Positives
The company has a strong balance sheet with excess cash which can be used to fund additional capacity without taking on debt. In addition the company is a part of the Tata group which is known for good corporate governance.
The company also has access to ore supplied by Tata steel which provides some stability to raw material costs. In addition the company has acquired a coal mine and is in process of developing it. This would help the company to control its key inputs costs which is iron ore and coal.
The company has demonstrated good topline and bottom line performance and has a high ROE (15% or higher) at low to moderate levels of debt. Finally the company has always operated at a low or negative working capital.

Risks
The key risk for the company is the nature of the industry in which it operates. The industry is cyclical, with low barriers to entry. In addition, the product is a commodity and hence the profitability of the company is tied to steel prices and the demand supply situation of the same.
The industry and the company are also characterized by large swings in performance depending on the demand and pricing for its product.

Competitive analysis
The industry is characterized by low entry barriers and the only competitive edge a company can have in this industry would be from economies of scale. Companies do not have much control on raw material (coal and iron ore mainly) pricing and the pricing of the final product (sponge iron) is also driven by steel prices. Scrap steel is a substitute for sponge iron and hence the price and availability of scrap steel also has an impact on the price of sponge iron.
Finally the industry faces price based competition, atleast at the local level and most of the companies are price takers. I don’t think any company can demand a premium for their sponge iron.

Management quality checklist

– Management compensation: Management compensation is fairly low with the MD drawing a compensation in the region of 50-60 lacs
– Capital allocation record: The management has demonstrated a good capital allocation record. The company has maintained an ROE in excess of 15% even during downturns. The company has also demonstrated an ROE of around 25% on the incremental capital invested in the last 5 years. The only negative has been the low level of dividend payout. The low dividend payout is however understandable due to the lower levels of free cash flows (atleast 20-30% of the earnings is required as maintenance capex).
– Shareholder communication – Shareholder communication has been good and the management has been transparent about the performance.
– Accounting practice – looks conservative
– Conflict of interest – none
– Performance track record – good in comparison to the industry economics

Valuation
The intrinsic value of the company can be taken between 350-400 for a net profit margin of around 11-13% over a business cycle and for a topline growth of around 13-15%. The current margins of around 17% cannot be taken as a base line as the margins have fluctuated between 4 to 24% with an average of 11% for the last 10 yrs. The topline assumption is a bit conservative, but a higher rate of growth will not increase the intrinsic value as much, as a higher growth would require a higher level of re-investment and result in a lower free cash flow.

Scenario analysis
The current price discounts a net margin of 11% and topline growth of 9%. A topline growth of 15% would give an intrinsic value of around 360-400.

Conclusion
The company seems to be undervalued by around 30-35% at best. The company may look undervalued based on the PE, but the correct approach to value a company is to compute its intrinsic value based on a DCF (discounted cash flow) formulae using the free cash flow generated by the company.
A company such as Tata sponge is in a commodity business which requires a higher level of maintenance capex (for understanding maintenance capex, see here). As a result the earnings of such a business consistently overstates the free cash flow. In case of tata sponge, the free cash is around 70-80% of the earnings. Based on the above free cash flow, margin and growth estimates, I would conservatively put the intrinsic value between 350-400.
Finally, the industry and the company is in a commodity industry with low to non-existent competitive advantages. As a result, it would be sensible to take the intrinsic value on the conservative side

Disclosure: I don’t hold the stock as it is not cheap enough for me. However I may not disclose it on my blog, when I decide to initiate a position in the stock. As always, please read the disclaimer

About
Sulzer india is a 200 Cr company in the business of mass transfer technology (mixers, separation column etc) for industries such as refineries, chemicals, gas processing etc. The company is a subsidiary of Sulzer chemtech AG. The parent also has a fully owned subsidiary – sulzer pumps.
Sulzer india has received technology support from its parent, which holds 80% of the equity in the company

Financials
The company has maintained an ROE in excess of 25%, with the number increasing to around 40%+ in the last 2 years. The company’s total asset base is almost same as the cash balance, so net of cash the invested capital is a very low amount. In addition the company also has a source of additional capital – customer advance which reduce the net capital requirement in the business.
The sales have tripled and net profits gone up by more than four times in the last 4years. The company is debt free and now operates with negative working capital

Positives
The company operates in a knowledge and technology intensive industry. It is supported by the parent in terms of technology and technical transfer. The company also has a strong balance sheet with excess cash and has demonstrated a decent growth record in the last 5 years.
Finally the company has maintained a decent dividend payout ratio in the last few years

Risks
The key risk in my mind is the lack of in depth information available on the company. The annual report is fairly sketchy. The parent holds 80% of the company and has attempted to delist the subsidiary in the past. As a result, I personally don’t expect them to care too much about their Indian shareholders. The tone and disclosure in the annual report seems to reflect the lack of interest on part of the management for the minority shareholder.
The core business of the company is fairly healthy and the company should continue to do well in the future. The risk is how much the minority shareholder will benefit directly from the value creation.

Management quality checklist

– Management compensation : The management compensation is not excessive and appears to be on the lower side
– Capital allocation record (dividend, ROE, excess cash, acquisitions etc) : seems decent with reasonable payouts in the form of dividends
– Shareholder communication: sketchy and poor.
– Accounting practise: appears conservative
– Conflict of interest: Though strictly not conflict of interest, the company pays 2% of sales as royalty to the parent. There is no explicit conflict of interest.
– Performance track record: The business performance has been good even during the downturn.

Conclusion
The company sells at around 11 time current earnings with cash levels in excess of 10% of the market cap. In view the fundamental performance, the company could easily be valued at 20 times current earnings. However fundamental performance is not always the sole determinant of value. In cases such as sulzer, which are MNC subsidiary companies the business performance does not always translate into shareholder returns as long as the management does not take specific measure to improve shareholder returns.
Sulzer has tried to delist the company in the past and current holds 80% of the stock. I will have to stretch my imagination on the point, that the company will suddenly start looking at improving the returns for the minority shareholder. In such a scenario, it is quite difficult to put an appropriate number on the intrinsic or fair value of the company.

Disclosure : I do not currently hold the stock. I may or may not buy the stock in the future and may not declare my holdings. Please read my disclaimer at the end of this blog.

Additional message
Let me take a break from our regular broadcast. I am currently looking for two things and would appreciate if any reader can help me on it

– I am looking at someone with the requisite technical skills, who can help me make changes to my blog layout and design. I can workout an appropriate payment either in cash or kind (you redesign my blog and I provide advisory service for your portfolio). If you know someone or can do it yourself – please write to me on rohitc99@indiatimes.com or leave a comment.
– I am looking at developing an automated spreadsheet for filtering stock based on various preset criterias by pulling data automatically from a public websites. I am not sure if this can be done and would appreciate any feedback on the feasibility of this requirement.

Correction : I posted analysis of JNJ from an old file instead of P&G. correcting it now.

I started the analysis of P&G (US) in my previous post. The balance of the analysis follows

Competitive analysis
The company faces a host of competitors ranging from local to store brands to companies like unilever. Most of the local and store brands compete on price.

P&G has rightfully realized the need for innovating in all the categories to stay ahead of the competition and thus maintain a price premium. In addition the company has a wide portfolio of brands and an extensive marketing and distribution infrastructure. These competitive strengths allows the company to fight price based competition.

The company has been investing almost 10% in marketing and sales and 3% in R&D. These investments are key to maintaining the competitive edge of the company.

Management quality checklist
– Management compensation: The chairman received a total compensation and bonus of around 57 Mn usd, which does not appear excessive. The company has an options program which would result in a rough dilution of around 10% or less.
– Capital allocation record: The management has a very good capital allocation record. They have maintained an ROE in excess of 20% for the 7-8 yrs. In addition the company has maintained a dividend payout in excess of 40%. The excess cash has been utilized to fund acquisitions and buyback stock. I would give the management high grade on capital allocation.
– Shareholder communication: The company has communicated its strategy and focus on innovation. In addition the company has is also transparent in communicating the long term goals such as organic growth, free cash flow target etc and the achievement against the goals. The company has also discussed in detail the performance of each division with clear details of the organic volume growth to enable the investor to understand the source of the topline growth. The company has been consistent in communicating good as well as bad performance.
– Accounting practice: appears conservative and I could not find any red flags. The company seems to have made conservative pension assumptions, has minimal derivative exposures and other off balance sheet liabilities. My only concern is the benefit assumptions. Although the actual returns are negative, the company is using positive expected returns on assets (allowed by GAAP). If the returns do not turn positive, we could see higher pension expense in the future.

Valuation
The company has a free cash flow which is almost equal to net profits. The company has an ROE in excess of 20% and an average growth in excess of 8%. If we assume a CAP period of around 10 years, a net profit growth of 8%, the intrinsic value comes to around 72-75 usd per share. If one reverse engineers the current price, the implied growth seems to be around 2-3% for the next 10 years.
The company thus appears to be undervalued by around 20-25% at current prices.

Conclusion
The company has been able to show a low single digit growth inspite of the global recession. The topline however has shown a low single digit drop. The company is in the process of disposing non core businesses such as coffee and the medical division. This should provide the company extra capital to invest in the core business, retire debt or continue with the buyback program.
The company has maintained its focus on innovation and new products and has been investing heavily in brand building and R&D, even through the recession. This should help the company when growth returns. The company has enormous competitive advantages in the form of strong brands, deep distribution network and a innovation oriented culture. Although the company is not undervalued by a wide margin, it should give moderate returns in excess of the index returns over the next few years. In summary it is moderate return, low risk opportunity.

I have created a pdf version of the analysis. Please feel free to download and share with others.

About
Procter & Gamble is an 79 billion dollar consumer goods company with well known brands such as pampers, gillette, charmin, bounty, tide, pantene etc. The company has operations across 180 countries across the world and operates in the beauty products, health and household care segment.

Financials
PG has consistently maintained an ROE in excess of 25% with a moderate leverage of around 0.5. The drop in the ROE since 2006 is more due to the accounting related to the Gillette accquisition than a drop in the profitability levels.
The company has become a more efficient user of capital by increasing its Fixed asset turns by 25% in the last 6-7 years and by turning Working capital negative during the same period. It has utilised the excess cash to reduce the debt ratios, maintain the dividend levels and buy back stock.
The company has been able to improve its Net margins from around 9% to almost 14% in the last 10 years. It has done this while maintaining an ad expense of around 10% of sales and almost 2.7% expense in R&D
The company has doubled its sales and tripled its profits in the last 10 years too.

Positives
The company under the leadership of A G Lafley has been performing fairly well. The company has increased its focus on innovation in various aspects of the business such as new product, packaging, cost management etc. This focus goes beyond the customary lip service and can be seen via the new product launches and continued volume growth in mature categories. The company continues to invest almost 10% of sales in advertising and upto 3% of sales in R&D which is the highest in the industry.

The company has a successful history of developing and maintaining strong brands. In addition the company also has an enviable marketing and distribution infrastructure which cannot be replicated easily.

The company has been able to grow the topline in high single digits for the last few years with volume growth in most of the categories in the 3-6% range. The value growth in the various categories has been in low double digits range due to the above volume growth in combination with price increases and favourable foreign exchange changes. The company is also growing in low double digits in most categories in the developing markets such as India, China and middle east.

The various financial parameters such as ROE (in excess of 20%) and net profit growth (in double digits for the last few years) have been extremely good. The company has also been able to successfully accquire and integrate gillette and thus gain cost synergy and increased leverage in the market.

Finally the company has been able to generate free cash flows in excess of net profits which it has been using to reduce debt and buyback stock.

Risks
The company is undergoing a transition at the top with Robert Mcdonald as the new CEO. Although the company is unlikely to suddenly change direction and focus, the change is occuring at a time when the volume growth has slowed down due to the recession

The company has recorded negative sales growth in the current year. Although the volume degrowth is not alarming considering the global recession, drops in market shares in categories such as feminine care, male dry shaving, batteries, fabric care and drops in the braun appliance range is a cause of worry and needs to watched closely in the future.

The company operates in a very competitive industry where the low priced local competitiors and store brands are competing in most of the categories of the company. As a result the company faces intense competiton in most of its product categories.

Next post : Competitive analysis, Management quality checklist, Valuation and conclusion.