The Best Brand In the Business – Bisleri (Orient Beverages)

 Untitled3 2 1

“Bisleri dena bhaiya” is a common conation when asking for Mineral Water. Such is the power of brand “Bisleri” that its become synonymous with Mineral water. As they say, one of the best investments is to invest in the power of brands and Bisleri is one such power brand. Bisleri is catering to the sunrise sector of pure drinking water. Mr Ramesh Chauhan – the man behind this power brand is known as “Water King” in corporate circles. Unfortunately Bisleri is not listed, but, there is one company which owns the license of manufacturing and selling Bisleri Water in eastern india, notably West Bengal, Orissa and Jharkhand and Chhattisgarh. Furthermore, they plan to extend their services to Bhutan, Nepal and Sikkim. This company is Orient Beverages. Orient Beverages has set up its own manufacturing facilities at Domjur (Howrah) and Dankuni (Hooghly) in the state of West Bengal. But there are many more reasons to buy Orient Beverages.

The company’s main business is linked with Bisleri Inc. fortunes as it is a license holder of the brand. Bisleri itself, is growing at a very brisk pace and this pace would increase with its entry into soft drinks business. Remember Bisleri Inc, in its earlier avatar as Parle Agro, was the owner of brands like Thumbs Up, Maaza, Limca etc. which was later sold to Coca Cola (by the way Thumbs Up is still the No. 1 brand in India). Coca Cola stopped Thumbs up for a few years to promote its own brand, but later realized that instead of Coca Cola, pepsi was gaining ground. Coca Cola realized its mistake and re-introduced Thumbs Up. Since then Thumbs Up remains the No. 1 soft drink brand in india. This is what Mr Ramesh Chauhan can create.

Orient Beverages revenues have grown from 7.99cr in 2010 to 21.99cr in 2014 and PAT has grown from 0.25cr to 1.26cr. The promoters are holding has increased from 43.22% in 2010 to 50.23% in 2014. The company is paying around 10% (of bottled water sales, not gross earnings) as trademark fees . The company is generating very good free cash flows. This is what a powerful brand gives you.

The earnings are going to get a major fillip, starting this year because of the following reasons:

  1. The company had just one plant till now. A new plant of similar capacity has started production since May 14. The demand was always great but with doubling of capacities, the growth will go in a different trajectory altogether.
  2. As per the latest AR, Estimated amount of contracts remaining to be executed on capital account is rs 11,22,76,870, i.e. more than 11cr (previous three years it had been 26,52,688 /35,73,986/2,45,000). Clearly, this year the company has started the year with a massive increase of order book . This is a sign of things to come.
  3. The company is entering soft drinks business along with Bisleri Inc. Given what Mr Chauhan had done with Thumbs up, Golds spot, Mazaa etc, this is going to be again, a terrific thing.
  4. Company has a good real-estate portfolio that it rents out. One portion of its real-estate is still vacant and its looking to fill it up. Once its done, it will give a strong boost to its bottomline, since the real estate business of Orient works with a margin of around 50% (as evident from their AR) and given a tiny equity base the EPS accretion will be substantial. What more, the rents are increased every year.
  5. Company paid its maiden dividend this year. This is good indication of the confidence the management has for future profit growth.

It is also important to note that promoters have 75% stake as pledged, although I would not worry about it as the stock price has literally doubled from its last disclosure, and I am extremely sure that the investors would be lapping up the share, so the risk of these pledged shares getting sold is highly minuscule, but still worth a disclosure.

Valuation: If Fevicol(Pidilite) and Jockey (Page Industries) can trade at 45-50 PE with market cap to sales ratio of 5-10 times, I do not see a reason why Bisleri should quote at a ridiculous PE of just 8 and market cap to sales ratio of just 0.5 times. Given the fact that earnings itself could easily double in next couple of years, one could see a huge re-rating taking place in the counter. Even if the stock price is to quadruple from here, it would still means a PE of 32 and that too trailing. Coupled with high growth that we are seeing, I believe the stock price should multiply multi-fold in the short to medium term.


The stock has broken out after two decades of consolidation and now at a price of 53rs and market cap of just 11cr, the stock can go up multi-folds in next couple of years. Given a small equity base, the stock price can easily fly from here.

As usual, this stock is for people with very high risk appetite.

This entry was posted in Stocks and tagged , , , . Bookmark the permalink.

51 Responses to The Best Brand In the Business – Bisleri (Orient Beverages)

  1. Sameer Anand says:

    Great pick but the stock is in periodic call auction. So won’t be able to buy it.

  2. Sameer Anand says:

    Very few brokers allow transactions in periodic call auction stocks.

  3. thakral says:

    wts ur view on singer india result…can I buy it..

  4. Sameer Anand says:

    Dear Aceinvestor,
    You mentioned that the company is entering soft drinks business along with Bisleri Inc. Are there more details available like would it be pan-India launch , New JV between 2 companies etc.

    Also the license agreement between 2 companies for Bisleri brand is for how many years? I mean could Bisleri award it to some one else ?
    I would certainly try and buy it through ICICI today.

  5. Prabu says:

    HI Aceinvestor,

    I noticed you have mentioned that few of your associates have already bought the stock. Please advise whether you recommend these stocks to some other people before recommending here. Please be genuine to investors. All your recommendations are great and we have great belief in you. Thanks a lot.


    • Brother,…associates are family members and myself. and if you had faith then you wouldn’t be asking such questions again and again. I dont have any paid service and if i had why would i waste my time writing blogs(which i do not even know is being followed or not.) and answering questions. Why would I do a “free service” if intentions were not correct.

      • Prabu says:

        Thanks a lot Bro.. Sorry for asking such a question. As I said I have great faith on you.. Lets all keep rocking.. Happy Investment!!!

        • Thats fine. I would have probably felt the same way. Please understand that in future, I would not be disclosing my personal trades. And it would give you and me better sleep at night if we all trust each other and try to research stocks better and make even more money. Cheers.

      • Lincoln P Coelho says:

        Ace : Well put. Also, thank you for your generous, excellent and well-researched inputs. I am confident they will give us great returns. I have added your URL to my Favourites folder. Keep up the good work.

  6. Doesn't matter says:

    I have read few of the comments above casting aspersions on the author and I have to say I am disappointed. I am not saying it is wrong to be wary in this dog eat dog world, but before you insinuate someone, think!

    If aceinvestor is trying to swindle your money by doing a pump and dump then why should he explain the fundamentals of each company, their business strengths, growth rate, capacity expansions etc?? That too he has clearly mentioned pitfalls in each of the companies he has recommended. Do you think you and me buying the scrip will catapult it into the next orbit?? The volumes I see on most companies are out of the capability of retail investors. Clearly institutional investors and HNIs have seen the merit in some of these companies and have dug into it. Look at the SHPs of his older recos if you don’t believe me…

    And lastly, are you saying it is wrong for him/his family/associates to make money from his work if at all they do? How is that any of your business? All I can say is It sure is a thankless job for people like ace!

    • Thanks. Clearly, my use of words “associate” misled people. Honestly, i did not want to disclose my personal and family trades and therefore, used the word, but clearly people have taken it strangely. Some people think that I am under obligation to “serve” them, but thats not right thinking. I try to answer each and every question at length. It takes time. But somehow people do not appreciate the efforts and thats sad. But its heartening to see that some people like you do take time and effort to analyze the situation more rationally. Anyways, no hard feelings against anyone.🙂 Lets get back to making money now.

    • Prabu says:


      I have misinterpreted aceinvestor words and replied like that.. Its not only me but I hope lot of people had the same question running in their mind.. Its better to clear our doubts than having it run through our minds.. After getting such a response from aceinvestor, my faith on him got to a highest level.. Thanks aceinvestor sir.

    • Lincoln P Coelho says:

      I second your sentiments. Absolutely correct.

  7. Divi says:


    Regarding Liberty shoes..

    Due to restructuring of LE and LGMD into LSL,they are going to save royalty fee of 15 cr and 10% reduction in cost of production..
    do you have any idea how much it would be 10% cost of production

    • they pay royalty of 2.5% which hopefully could come around to 15cr for this year. 10%savings on cost of production is very big. I had not factored in this much cost saving. If this comes though, you could add atleast 18cr more to saving. total savings of more than 32cr for FY2015. THIS IS HUGE. Lets keep our fingers crossed. You know management has also indicated that they would do 1000cr of revenue in next 3-4 years. Its great. The story is just unfolding. The kind of bottomline savings that we are talking about this just great. On top of all this, we also have two more phases of consolidation to follow.

  8. Divi says:

    can we assume 10% cost of production tentetively as 10% of raw material cost or 10% of total expences..if take it as 10% of raw material cost..for one Q they will save roughly 5 cr …this alone 60% more than net profit…

    please guide me how to arrive 10% of production cost..

    • As far as I am concerned, I am looking into the consolidated finanacial statements of last year’s AR and taking Employee befenfits expense, financial expenses (again this is very small and can ignore depending upon what exactly financial expenses constitute), manufacturing expense and Administration expenses. In terms of annual results it means roughly, 10% of (employee benefits expenses + other expenses), which comes out to be much more than 18cr, but I am trying to be over conservative (as it helps i have seen). This is very good savings, i am sure you would agree.

  9. Divi says:

    Earlier in fact i have not considered this 10% cost of production in my forecasted earnings.
    how did u arrive 18 there production cost in balance sheet or PL statement..
    f that is around that no..simply great..eps will be 3 to 4 times..
    I am already holding 10%..I am thinking to load up 3 to 4 % more..
    what is your suggestion…

    1000 cr in 4 years means slight less than 20 CAGR growth in top line…thats not impressive..may be bottom line will be substantial..

    • yes, bottom line would be great. as i said i looked into consolidated financial statements in the AR. 20%CAGR may look less, but given that liberty management is little conservative and does what they promise, I would be more than happy. By the way they said 3-4 yrs, so it could be done in three years as well, but i am still happy with 20% topline, coz its the bottomline, that would do all the magic. Right now, PAT margin is 2.5%, which is miniscule. bata has close to 10%. I am happy with 20% CAGR, but actually believe that liberty would do around 25-30% CAGR for next three years. So next year, just on the accounts of cost savings, we could be having an EPS of around 15-18 rs, so next year, we could be staring at a possible EPS of around 28-30 rs.

  10. very_common_investor says:

    any input on Jai Balaji and Country Club?

  11. Amit Gupta says:

    U have mentioned/projected SKS Microfinance having market Cap of 1 Lac cr by 2020 but I am apprehensive on this basis undermentioned concerns:-
    1. RBI will be issuing more new banking license to those financial institutions who serve rural areas/SHG/JLG.
    2.As we continue to grow with about 6% as a nation more & more people will directly get associated with scheduled commercial banks.
    3.If at all SKS Micro manages to build huge portfolio, their Net Interest Margin will be a question mark.

    Pls share ur views on above.

    • It is a possibility. Think about it, its a micro-lender not a bank. There’s a difference between lending and banking. Furthermore, they have a great distribution network and they can leverage their network for cross selling and marketing different products too. They already have a resolution in place. Furthermore, being a NBFC and not bank, their return ratios would always be better. You know kotak bank grew its market cap by more than 35 times in last 10 yrs, and there was a period of severe financial crisis in last 5 yrs, so its “possible” that SKS being the biggest micro-lender grows well. Yes, I lac cr is a big ask, but if tries to unlock value, it is possible, who knows, but my belief is it will go up multi-fold. Financial inclusion is going to make its business only better, as there would be more customers will available credit history.

  12. Salim Khan says:

    Hi is it right time to add vV2 Retail

  13. Divi says:


    regarding liberty..

    I think this year LSL has to pay royalty to LE and LGMD as their contracts are upto march end of 2015.this restructuring will be effective after their existing contrat is finished.
    so i believe this royality and other effectsrelated to operational effciencies can be reflected in FY16 EPS..
    I think 2-3 months down the line they will take decisons related to rules and regulations of merging plans and may implement after their existing contracts are closed..but once this merging plans are out then stock will start to factor FY16 EPS..I believe..

    and one quary regarding…HSIL..
    I saw yesterday managemnt interview..they r saying that FY14 glass division was in loss..and in FY15 They r expecting break even or 8-10 cr loss in worrest case..
    but if i check Conolidated results of PBT evel glass division has given 9.91 cr profit..
    but i heard from same management that glass division it turning around..and glass divison performance is getting improved or last few Quarters..
    how come this..FY14 glass division is at 9.91 cr profit at PBT level..and FY16 glas division will be break even..
    how come this be a improvement…Am i missing some thing..

    • Consolidated means results of their subsidiaries, not their divisions. for results on per division, see their segment wise reporting. I do not track HSIL by the way. For liberty even i expect their kicker to start from next yr, but once the announcement is made, stock will start pricing it in.

  14. thakral says:

    when ur next pick is coming.. .mr aceinvestor..

    • not sure. Nothing substantial on my system now. There are so many stocks right now that could double by the next year or so. To make money in markets, you need stock(s), that you believe could double in a year or so, not necessarily new stocks. In last five years I had just a handful of stocks that i could come out with, but its this bull market that I was able to come out with so many stocks in last few months. Do not see a new stock idea coming for next few weeks. But if there’s anything that comes in my radar, will put the idea up on this blog. But as i said, there are very good stocks still available at good valuations.

  15. bingo says:

    what about press man adv sir?

  16. Vishal says:

    Hi Ace,

    I have few Questions
    1. Could you please share the details about the real-state Propery for OBL.
    2. We didn’t find any details about Bisleri Inc entering into soft drink market and giving license to OBL for eastern region.


  17. mitajakom says:

    Sir I am seeing close of pledge shares by promoters. Doesn’t it mean now they don’t have any pledge shares?

  18. dinesh jain says:

    Cola king Chauhan eyes energy drinks with Urzza, The non-caffeine energy drink will be launched on Sept 15 across the country in 250-ml cans and 300-ml PET bottles, priced at Rs 50 each

  19. dinesh jain says:

    Orient Beverages Ltd has informed BSE that the Company has started trading of an energy drink under the trade brand “BISLERl URZZA” w.e.f. September 06, 2014. The Company is already in the business of packed drinking water under the trade mark “BISLERl” and doing manufacturing and marketing of the same. The Company is planning to start manufacturing and marketing of “BISLERl URZZA” also.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s