Blue Bird (India) Ltd - 55.00 Rs

Incorporated in 1999 and promoted by Mr. Nitin Sontakke, Blue Bird India Ltd (BBIL) is one of the leading manufacturers of paper based notebook products such as students / exercise books etc. With promoters having rich experience of more than 30 years in printing, company has made a strong presence in western India thru its “Blue Bird” brand commanding 48% market share of the total organized segment across country. Broadly, company has segmented its business into three divisions - stationery, publication & commercial printing. In addition to finest quality notebooks, it also produce a range of office stationery products like executive notepads, diaries, arch-lever files, perforated pads, registers, filler papers and folders. Although notebook forms the core business with more than 80% revenue, BBIL has off late ventured into publishing academic textbooks and self study books for children apart from general publications in subjects such as ayurveda and biographies. It has its own in-house academic publishing team which works with external authors to develop content for educational books. Under commercial printing, it designs and prints annual reports, brochures, catalogues, offer documents, coffee table books, calendars, greeting cards, magazines, text books, publications etc

BBIL has got ultra modern factory set up in Pune which can be treated as one of the best in Asia. In order to cater the central and south India market efficiently, company has put up two new plants at Indore and Bangalore, which started production in last couple of months only. Besides, company has a strong distribution network of around 600 dealers and 9000 retailer spread across 18 cities in India. Moreover, company has just started to export its products to Ghana, Kenya and South Africa. Recently, it has been successful in acquiring a big order from a US based conglomerate and leading student materials manufacturer. Notably, BBIL has ambitious growth plans for publication division and intends to increase its share substantially in coming years. Hence it is entering into a joint venture with a well known publication bureau in Maharashtra. Accordingly it has imported specialized machine used in printing of glossy papers especially used in news paper supplements etc. To have a strong pan India presence and to penetrate in untapped market, BBIL has plans to add approximately 100 regional sales and marketing offices over the next five years. Meanwhile, it will also be augmenting its existing Pune plant’s manufacturing capacity thru a capex of approx 25 cr. It has recently acquired some land in Pune for the same.

In Nov 2006, company mobilized 92 crores thru IPO at 105/- Rs per share. Out of this nearly 60% has been utilized and balance is being deployed for capacity expansion and setting up regional offices. Fundamentally, company recorded sales and NP of 454 cr and 27 cr for FY07 respectively. Thus it posted an EPS of nearly 8 Rs on expanded equity of 35 cr on which company gave 12% dividend. In future, company may raise External Commercial Borrowings to the tune of $ 50 million by way of private placement. For FY08 it is estimated to clock revenue of 550 cr and PAT of 34 cr i.e. EPS of 10 Rs. However, the main growth is expected to come in FY09~FY10 due to full impact of expansion. Company has the potential to post 14 Rs EPS in FY09. Considering its IPO price of 105 Rs, book value of 50 Rs and 52 week H/L of 128/55 Rs, its one of the safest bet in such overheated market. Therefore long term investors are strongly recommended to buy at current levels as scrip can give 100% return in 12~15 months.