Saral Gyan Special Report 5 Hidden Gems - 5 Baggers in 5 years - Apr'14 Update

1. SPECIAL REPORT UPDATE
5 HIDDEN GEMS
POTENTIAL 5-BAGGERS WITHIN 5 YEARS
DATE - 20TH APRIL 2014
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Saral Gyan Capital Services

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FROM THE DESK OF OUR RESEARCH TEAM
Dear Member,
We are pleased to share update of 5 Hidden Gems – Potential 5-Bagger in 5
Years report with performance summary along with our Buy, Sell and Hold
recommendation. Report was released on 26th July’13 when there was lot of
pessimism around the market and we find it as one of the best time to invest in
some of the fundamentally strong small cap companies. This report includes
company’s performance, recent updates with our views and recommendations.
Today, there is a concern of downfall as broader indices Sensex and Nifty is at all time high levels. We
expect market will be highly volatile with election results around the corner. As of now, stock market is
in control of bulls with strong positive bias towards Ab ki Baar – Modi Sarkar (this time – Modi led BJP
Government). In case of any negative surprises in election results, major indices may see a downfall of
10 – 15% or vice versa if it’s a majority win. However, any correction must be considered as a buying
opportunity as long term outlook is bullish for equities. We believe that bear market of last 6 years
(since Jan 2008) is over and equities will outperform all other asset class in coming years.
You will agree that Investment decisions for long term can’t be taken by timing the market movement. It
is important to understand the Industry potential, company’s fundamentals and valuations with a long
term perspective. We evaluated these stocks with a long term view (2-5 years), we firmly believe that
good quality businesses in India will continue to deliver strong double digit growth and its always logical
to invest in those businesses which deliver better returns than any other asset class.

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Our team published special report 5 Hidden Gems - Potential 5 Baggers within 5 Years (published on
26th July'13) and shared it with all our Hidden Gems and Wealth-Builder members. Objective was to
achieve average annualized returns of 38% each year to achieve 5-Bagger returns in period of 5 years.
As illustrated in table below, if all these companies generate returns on your investment @ 38%
annually, your investment will be 5 fold in period of 5 years. Even if we take conservative scenario
considering that only one out of five achieve CAGR of 38% and remaining four delivers CAGR of 20%,
your investment will be trebled (3 times) in period of 5 years which is also good compared to returns
from other asset classes or major indices - Sensex and Nifty.
However, our team is confident enough to achieve 5 times returns in period of 5 years by monitoring
performance of these companies and taking corrective measures in case any of them does not perform
up to our expectations.
5 HIDDEN GEMS: POTENTIAL 5-BAGGER IN 5 YEARS

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Few important parameters which has been looked by our equity analysts while finalizing the stock
selection are as under:
1. Market leader in the business / any one segment in which the company is operating in.
2. Scalable business with significant moat (sustainable competitive advantage)
3. Prudent Management with promoters increasing their shares holding in the company
4. Zero or negligible debt on books with healthy cash flows.
5. CAGR of above 15% with increase in operating and net profit margins in last 5 years.
6. Consistent dividend payment with dividend yield above 2% in last 5 years
7. Increasing EPS, single digit PE ratio with ROE and ROCE above 20% in last 5 years.
8. Zero or negligible share holdings of Institutions (FIIs & DIIs) to get first mover advantage.
Each parameter is equally important and plays a vital role to ensure that you get healthy returns on
your investment with limited downside risk in long term. One of the important key to successful
investing is to pick the right business at decent valuations. Once you buy shares, you own a part of
company’s business.
We at Saral Gyan recommend good businesses to buy with long term view and any change in our stock
views will be based on strong structural trend and not on any short term movement.
5 HIDDEN GEMS: POTENTIAL 5-BAGGER IN 5 YEARS

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5 HIDDEN GEMS: PERFORMANCE AT A GLANCE
SCRIP
REITERATE
BUY (26TH
JULY)
BUY PRICE
(26TH
JUL'13)
C.M.P
20TH
APR'14
RETURN AT
C.M.P
ORIGINAL
RECOMMEND
-ATION DATE
RECOMMEND
-ATION
PRICE
RETURNS
AT C.M.P
WIM PLAST BUY 335.0 612.0 82.67% 30-Aug-11 185.0 230.78%
MAYUR UNIQUOTERS* BUY 107.5 301.0 179.95% 31-Mar-12 56.0 437.89%
ROTO PUMPS BUY 95.0 171.2 80.16% 5-Aug-12 94.5 81.11%
ACRYSIL INDIA BUY 100.0 242.5 142.50% 25-Nov-12 113.5 113.66%
ADOR FONTECH BUY 62.5 67.4 7.84% 25-Jul-13 62.5 7.84%
AVERAGE RETURNS (AS ON DATE) 98.62% 174.26%
* Indicates Bonus/Split adjusted price
We are glad to share that 4 out of 5 Hidden Gems have given returns in the range of 80% to 180% in
matter of just 9 months. Mayur Uniquoters have given fabulous returns of 180% followed by Acrysil
returns of 142.5% where as Ador Fontech has not performed up to our expectations giving marginal
gains of 8%.
Average returns of our 5 Hidden Gems as on date is 98.6% compared to Sensex returns of 14.6% and
Small Cap index returns of 34.6% since 26th July’13, outperformed small cap index by whopping 62%.

6. 1. WIM PLAST Returns at CMP: +83%
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1ST HIDDEN GEM: POTENTIAL 5-BAGGER IN 5 YEARS
Wim Plast is a zero debt company with maximum promoters holding of 75%. Company is posting
good results every quarter and is maintaining revenue growth of 20% YoY. Company is maintaining
operating margins above 17% since last 5 years and is taking all right steps to deliver consistent
growth. ROE is above 23% since last 5 years, which is good for such a small cap
company. Company has strengthened its brand equity of ‘cello’ branded products throughout
country and has been continuously increasing the ad spend. Company is launching new models for
its product range including various new designs. Another prominent brand of the company ‘Cello
Bubble Guard Sheets’ has gained rich response from the users for applications like Tile Protector,
False Ceiling, Wall Panel and Packaging materials.
Moreover, company has recently purchased around 1 (one) acre of Lase hold Land at Sipcot
Industrial Complex, Gummidipoondi, Tamilnadu for further expansions. The commercial production
of the new manufacturing unit is expected by the end of the 2nd quarter of this financial year.
We suggest our members to continue holding Wim Plast in their equity portfolio. In case if you
missed to enter in this stock, and not holding Wim Plast in your equity portfolio, kindly initiate your
investment with 2% allocation which can be increased to 5% only if stock price corrects and
available in the range of 475 - 525 during any future market correction.
RECENT UPDATES
&
DEVELOPMENTS
SARAL GYAN
VIEWS &
RECOMMENDATION

7. 2. MAYUR UNIQUOTER Returns at CMP: +180%
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Mayur Uniquoters is our 5-Bagger stock. We recommended this stock 2 years back at price of Rs. 56
(adjusted price after 2 bonus issues and stock split in last 2 years, actual recommended price was
Rs. 448) and today it’s at Rs. 300. In fact, its a 100-Bagger stock for investors who invested in it 5
years back. Company has posted strong growth YoY and rewarded share holders in big way,
Company was trading at Rs. 3 (bonus / split adjusted price) with market cap of merely 13 crores,
today market cap of the company is 1,300 crores and company has paid total dividend of Rs. 9.25
during 2013 which is 3 times of its share price in 2009. Well, that was the past, what make us to
believe that company is still a great value stock is the consistent growth of the company and robust
demand for its products by esteemed clients from auto and footwear industry.
Moreover, company is witnessing institutional interest, FIIs share holding is increased to 2.18% in
Dec'13 from 0.13% in Dec 2012. We believe that Mayur Uniquoter is a great company to own,
valuations now seems to be fairly priced but still one can expect returns of 20-25% annually going
forward considering leadership position of the company in artificial leather industry and good
demand of its products in India and abroad.
Mayur Uniquoter is a classic example of "Buy Right and Sit Tight". As per valuations, stock is trading
at trailing PE of 25.5 and seems to be fairly priced. However, company deserves PE above 20
considering its past track record, future growth visibility and its leadership position in the industry.
We suggest our members to keep holding Mayur Uniquoter in their equity portfolio. In case any of
our member missed to enter in this stock and is not holding Mayur Uniquoter, kindly initiate your
investment with 3% allocation at CMP which can be increased to 5% only if stock price corrects and
available in the range of 200 - 225 during any future market correction
RECENT UPDATES
&
DEVELOPMENTS
SARAL GYAN
VIEWS &
RECOMMENDATION
2ND HIDDEN GEM: POTENTIAL 5-BAGGER IN 5 YEARS

8. 3. ROTO PUMPS Returns at CMP: +80%
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3RD HIDDEN GEM: POTENTIAL 5-BAGGER IN 5 YEARS
Looking at peer companies, Roto Pumps is performing well and regularly rewarding share holders
by paying dividends. For such small companies, its very important to know whether management is
taking care of minority share holders or not and Roto Pumps meet our expectation. Company is
paying regular dividends since last 9 years and dividend payment has increased from Rs. 1 to Rs.
2.5 and dividend yield was 4% at the time of our recommendation. Operating profit margin of the
company improved from 16% to 18% with sales growth of 17%, profit growth of 21% and ROE of
24% during last 5 years.
Recently, company has announced setting-up of a joint venture company in Singapore. The joint
venture company would further make strategic investments in the related field including business
development of Company’s products in African continent. We suggest our members to hold this
stock in their portfolio.
Roto pumps is a micro cap company with market cap of 53 crores with small equity of 30.91 lakh
shares, one can see high volatility in stock price movement. Trading volumes are low and hence we
suggested our members to accumulate such stocks in small quantities and avoid buying big
quantities in singe day. We suggest our members to hold Roto Pumps in their equity portfolio. One
can add Roto Pumps in his portfolio at a price range of Rs. 140 – 150 with initial allocation of 2%
which can be increased further to 5% at price range of Rs. 110 – 120.
RECENT UPDATES
&
DEVELOPMENTS
SARAL GYAN
VIEWS &
RECOMMENDATION

9. 4. ACRYSIL Returns at CMP: +142%
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4TH HIDDEN GEM: POTENTIAL 5-BAGGER IN 5 YEARS
Acrysil has given returns of 142% during last 9 months, we believe there is huge growth potential
for the company considering increasing demand of premium house hold products in India. Recently,
management have shared their plan to be no. 1 in kitchen segment and set target of becoming a
1000 crore company by 2020. It seems to be an over ambitious target to us considering yearly
revenue of Rs. 78 crores in FY 2013, however high growth opportunities in this niche area of
kitchen utility products in coming years can not be ruled out. This is one of the industry, which has
the potential to grow at CAGR above 25% in coming years considering increase in urbanization and
increasing interest of middle class families towards modular kitchen.
Company is continuously increasing its total manufacturing capacity of granite sinks which is
uniquely positioned by the company and sells under CARYSIL brand. Also to drive growth, company
has entered into other kitchen utility product like chimneys, hobs and cooktops with increased focus
on domestic market since last 2 years. Company has also entered into manufacturing of stainless
steel sinks to cater to the domestic market through its subsidiary Acrysil Steel Pvt Ltd.
Company is having aggressive plans of becoming Rs. 1000 crores. The sales growth, profit growth
and ROE for company is 21%, 11% and 27% over the past 5 years. For FY 2014, company is
expected to deliver EPS of Rs 20, trading at estimated PE of 12 and offers good upside potential.
We suggest our members to continue to hold Acrysil in their equity portfolio. In case you are not
holding Acrysil in your portfolio, kindly initiate investment with 3% equity allocation at price range
of Rs. 190 – 210.
RECENT UPDATES
&
DEVELOPMENTS
SARAL GYAN
VIEWS &
RECOMMENDATION

10. 5. ADOR FONTECH Returns at CMP: +8%
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The major end user industries of Ador Fontech, especially mining, construction, energy, etc have
witnessed much slower growth in comparison to the overall economy. However, as interest rates
seem to have peaked out and with speedy regulatory approvals, the next 4-5 years can be much
better for the end user industries of Ador Fontech and therefore also for the company.
Ador Fontech has reported increase of 13.06% in net profit of to Rs 2.77 crore in the quarter ended
December 2013 as against Rs 2.45 crore during the previous quarter ended December 2012. Sales
rose 7.91% to Rs 32.88 crore in the quarter ended December 2013 as against Rs 30.47 crore during
the previous quarter ended December 2012.
Recently, company has issued 17,50,000 number of warrants convertible to equity to the promoter, J
B Adwani and Company Pvt Ltd.
Ador fontech top line has seen muted growth during first 9 months of FY 2014. Operating profit
margins remained under pressure, it decreased to 14.84% in 3 quarter of FY 2014 compared to
22.1% in FY 2013. We believe that management is capable enough to turnaround performance,
however we find better investment opportunities and hence suggest our members to completely
exit from Ador Fontech at current levels with marginal profits of 8 to 10 percent. Any correction in
stock market may take the price back to 55 – 60 levels, hence suggesting complete exit.
RECENT UPDATES
&
DEVELOPMENTS
SARAL GYAN
VIEWS &
RECOMMENDATION
5TH HIDDEN GEM: POTENTIAL 5-BAGGER IN 5 YEARS

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As Sensex and Nifty are at all time high, we would not suggest aggressive buying in these companies at
current levels. But to ensure that we do not miss good investment opportunities, we have suggested
initial allocation of 2-3% which can be increased further in case of correction in stock prices.
We would suggest our members to exit from Ador Fontech and take exposure in Atul Auto Ltd with
initial allocation of 3% in your equity portfolio. Atul Auto Ltd is our Hidden Gem stock of Feb’14 and we
recommended BUY on Atul Auto at price of Rs. 282, currently it is trading at Rs. 355 and is a good long
term investment opportunity from small cap space.
IMP Note: As these stocks are small caps with low liquidity (daily trading volume below 10,000), we
suggest our members to buy/accumulate these stocks in small quantities. Ex: If you are planning to Buy
500 shares of Atul Auto, do not buy whole 500 in a single day, this may trigger your buy order at a higher
price. We suggest you to buy 50 to 100 quantity on daily basis during next 5-10 days.
We also take this as an opportunity to say a big "Thank You" to all our paid members for subscribing to
our services and showing trust and faith on us. The journey of success was not possible without your
support and appreciation. We will keep trying our level best to ensure that you continue to get
rewarded in medium to long term by investing in fundamentally strong small and mid cap companies
recommended by our equity analysts team.
Wish you happy & Safe Investing!
Team – Saral Gyan.
5 HIDDEN GEMS: POTENTIAL 5-BAGGER IN 5 YEARS

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