Congratulations to you all for participating in this superb run of Gujarat Reclaimed Rubber. Thanks for all your wonderful comments and your continuous support. Even in this relatively dull market, GRRPL has done remarkably well.
The stock has been a major outperformer and has more than doubled since our initial recommendation @ 875 about 2 years ago to Rs 2,000 now. We have been repeatedly providing updates on Gujarat Reclaim Rubber and the high allocation & conviction has been possible due to the regular feedback by our readers and friends. We would encourage you all to invite more of your friends & colleagues and keep exchanging more ideas.
Here is the two year chart:
Though the recent run-up has been quick but it remains an excellent stock idea for a long term portfolio given the high quality fundamentals and regular growth of the company.
GRRPL is world’s third largest manufacturer of reclaimed rubber and has been growing at a compounded annual growth of 28% for last 11 years! The company has a strong competitive advantage and has undertaken series of expansions to maintain growth going ahead. The company had aimed to be a 500 Cr company by 2014 (company did 185 Cr turnover in 2011 and 240 Cr turnover is expected for FY 12) and and they seem to be moving in the right direction.
GRRPL had done a greenfield expansion at Sohlapur during FY 12 and the first phase achieved full utilization quickly. The company has undertaken Phase 2 of expansion to increase capacity by another 10-15,000 MT. This might have become operational during March, 12. The company has also undertaken another greenfield expansion of 10,000 MT in Phase 1 at Erode, Tamil Nadu and the same might get completed during Q1, FY13. So with successful completion of these expansions, the company has a potential to deliver another 30%+ growth during FY13.
One does feel tempted to do profit booking seeing the quick run-up but we feel that investors should try to remain invested (apart from partial profit booking) cause such high quality businesses are not easy to find. Also, given poor fiscal deficit situation of India, good export oriented companies should continue to do well.
Last 1 year has been a stock pickers market wherein market has rationally rewarded high quality growth companies. There are plenty of hidden gems in the mid cap space and investors should do continuous investments to participate in existing & new promising ideas.
Updated Financial Sheet for Gujarat Reclaim: