Superhouse Ltd:-Buy/sell: multibagger

Scripscan:Superhouse Ltd



Story:Incorporated in 1980, SHL manufactures and markets finished leather products like footwear, shoe uppers, sports shoes, leather garments, bags, wallets and other leather goods. This US $50 million Superhouse Group has 15 units with workforce of over 5000 and presence in over 35 countries. Its textile division contributes nearly 10% of revenue.The company has 6 subsidiary companies namely Superhouse (UK), Superhouse (USA) International Inc, Superhouse Middle East FZC, Superhouse R.O. S.R.L., Super House Canada Inc and Super House HK.Its ‘Allen Cooper’ brand enjoys prestigious patronage British and European markets. The brand has now stepped into the Indian market and caters to corporate and institutional customers creating a niche image for its fashion leather products adhering to the high standards that the British have set, ‘Double Duty’ is a brand owned by SHL for marketing safety footwear and garments mainly to the Gulf and European countries.Its three state-of-art units manufacturing of footwear are ably backed by its three marketing subsidiaries strategically located in USA, UK, UAE & Australia. To add on, it is an approved vendor to global retail brands such as Wal-Mart, Filanto, Auchan, Andre, Shoe Fayre,Hudson Bay, Heckel Securite, Secura and many more.Its in-house tanneries sole division provides the finest quality leather soles for footwear. To meet the exacting demand of its clients, it also imports leather fromBrazil,ItalyandColombia. SHL derives nearly 85% of its revenue through exports.Its products are exported to countries like France, Germany, Holland, Australia and South Africa.In the last three years, SHL has spent Rs.60 crore on expansion to cater exclusively to the US and European markets. Its existence for over three decades allows it to offer customers the maximum in choice, value & quality. The prospects of the leather industry are so bright that the exports from the country are expected to touch $7 billion by 2013-14.India has around 3% share of the global trade in leather compared toChina’s 20%. Realizing the growth potential of the leather industry, which occupies a prominent place in the Indian economy, the Government of India is making significant efforts to promote the rapid advancement of the industry. The global leather market is estimated at US $116 billion.Over the last 4-5 years, there is a rising trend in advanced countries to outsource certain services to other nations. Global retailers want to spread their risks and not rely only onChinafor sourcing their requirements. Hence total fashion category solution providers such as SHL are well-poised to encash this opportunity. This trend is now growing extremely favourable towardsIndiawith EU outsourcing a sizeable portion of its requirement, away fromChinatoIndia. During FY12, SHL is likely to post an EPS of Rs.17, which discounts the current market price of Rs.47 of SHL’s share atmerely 2.7 times.The 52-week high/low of the share has been Rs.76/40.Altogether a good hold at present levels.

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