Micro Cap Coverage– Indag Restaurants and Leisure Limited

For the first time i am trying to recommend a small/micro cap which if works well could work out to be a 3-5 bagger or end up at 30-50% loss also in worst case.

So in simpler terms i would call this section 1 ka 5 or 1 ka 0.5

The stock name is Indag Restaurants and Leisure

Current Market Price:14-15 Rs

Market Cap : 54 cr

Time Frame: 6-12 months.

 

Some observations which make it an interesting bet:

 

The company operates some very interesting restaurants in Mumbai.

Garcias Pizza has 20 outlets in Mumbai

Ivy Wine Cafe and Bistro 7 outlets

Nandos restaurant in 3 malls in Mumbai

3 clubs Prive, Athena and Zaha which are pretty famous.

Hotel Shalini Palace a heritage hotel in Kolhapur.

So the company has some interesting brands of restaurants which if operated well could turnout to be a success story and also a franchisee model can be developed.

Another interesting part is Shivanand Mankekar a shrewd value investor is holding 10-12% stake in the company and that too from very high levels in 2007-2008.

 

Risk and Concerns:

Management has not been transparent and dont have a good reputation.

The debts are decently high for comfort.

 

Conclusion:

Investors can take small exposure with a view of 6-12 months and be ready to risk 30-40% hit also on the above stock in worst case ( so buy only quantity where you can lose 30% and not get bothered by it) . On the upside over the next 1-2 years the stock can be a 3-5 bagger if things work out fine. So high risk higher returns.

The stock is illiquid and in t2t so accumulate slowly and take only small quantities as its high risk too. Technically the stock can see a strong move above 17 levels.

Will update further as and when more information is gathered on the stock.

 

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Regards,

Nooresh