Hindustan Inks is the leader in the Rs 650 crore domestic printing ink industry—market share of 40 per cent. It has excellent credentials—fully integrated operations, diverse client base, productive R&D and presence in key overseas markets. Over the past five years, its sales and net profit have grown at a compounded annual rate of 40 per cent and 26 per cent, respectively.
With subsidiaries in the US and Europe (the two largest markets), Hindustan Ink is looking at exports to achieve a targeted five-fold increase in sales by 2005. Although it might miss this ambitious target, sales and profit growth should be good. The company’s US subsidiary has an order book size that will see it match its parent in sales in two years. At its current price of Rs 296, the stock discounts its projected March 2002 earnings 9.6 times. That’s attractive, given its growth prospects. But the poor liquidity in the stock means you should invest only with a three- to five-year horizon.