Pressman Advertising Ltd. (prev. Nucent Estates Ltd.) is a full-service advertising agency providing a package of services in advertising, public relations, design and digital services to its clients. The company has a network of offices in many major cities in India. Through a merger of Pressman Advertising Ltd. with already listed Nucent Ltd., the current entity happens to be the only listed full-service advertising company in India as of now.
It is one of the oldest & largest Indian advertising agencies, and sole agency in listed space. The space is dominated by large multinationals. The business model is good, high margin, without much capital requirement and scalable. The financials of the company is good, not much debt, great dividend yield (5%). Management is good. Appears to be safe bet, and can pay handsomely if some Indian agency is able to establish itself globally.
Pressman Advertising is a very old Indian Advertising agency promoted by one Suchanti, who had a great reputation in advertising community. Now the company is run by his sons, all looks well qualified. Unlike other indian advertising agencies (Rediffusion, Chaitra etc.), they didnt merge themselves with multinationals and maintained separate existence. Lately they acquired a listed defunct construction company, merge themselves with that, and changed the name to their name. It happened in October 2013. The company is a very small company (40 crores revenue) but large for a business having big margins. Company is valued around 1 times sales, and 12 times earning. Negligible debt. Margin is good and ROE is excellent. Dividend yield is 5%, and dividend coverage is around 2.5 times.
My interest on the stock is for these reasons-
(1) My inherent bias for service sector, particularly in high margin businesses.
(2) The business is scalable without much capital infusion.
(3) ROE is likely to be high for incremental capital deployment.
(4) Economic recovery shall result in higher advertising spend.
(5) They are doing the right things in terms of moving towards digital advertising, financial communication, PR work etc. Their client list is good.
(6) The sector is largely unorganized at this point of time, and any organized company taking foothold in this sector can be rewarding.
and finally the basic question- Is it possible that in a few years time, some Indian advertising agency can stand in comparison to US advertising agencies like Lintas, Leo Burnette ?
Some of the services offered by the company include
- Financial Advertising – such as advertising financial information in mass media.
- Government Advertising – such as tourism promotion, tender solicitations, recruitment advertisements, etc..
- Corporate Advertising
- Brand Advertising
My only concern is that the top-line remains stagnant.
They clients include several respected A group listed companies and many B group companies.
Note: I have already invested in since last 6 months at 22rs. There has been a sudden jump in this stock since last 20 days. New investors be cautious at current levels.
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10 comments:
Dear sir,
Your recommended stock ambika cotton giving me good returns.but i will go long..Also i want to draw your attention to birla cotsyn..This company is also in same buisness as of ambika cotton..Will it prove to be a multibagger in near future as the price is in range from past 3 years..Should i go long in this too or wait
I stay away from such companies. All time high is rs 1. There are far better bets. Maybe put 500rs and forget about it.
Hi Pranab, any comments on cupid. After continuous UC, it started LC?
sir your view on alufluroide limited, a company takes waste from chemical giant and convent them in product used for making aluminium which brings down the cost of aluminium smelters. Requesting you to kindly look into this stock and give a review for long term.
There were some speculations going around saying that the promoter is getting new orders.
Pranab what to do with palred . if it will go up later i do not mind holding it. Please advice.
Why pressman is hitting lower day by day ?
I mentioned number of times exit Palred.
Regarding Pressman, In the last 20 days it gone up from 19rs to 35. It has not hit lower circuit yet but some correction is bound to happen. Read the last few lines of the report, Be cautious to invest at current levels.
Alufloride looks decent. I will look into it.
Thank you very much for the wonderful and informative article.
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