Background: Pressman Advertising Ltd, is the only listed pure advertising company and is therefore, peerless. The company is operating in an industry dominated by multi-nationals but is a leading Indian Advertising Agency. Advertising by virtue of its nature does well in a booming economy and given the changed mandate in the center and expected strong revival in the economy the Advertising Industry as a whole and Pressman as a company should benefit quite a bit.
Introduction: The company is a Leading Indian Advertising Agency and has built a name for itself in a crowded market over the last four decades which is evident from the fact that most of the business is repeat business. The company is promoted by the Suchanti brothers presently but was started by their father in Kolkata around four decades back. Even though the industry does not do relatively good during economy downturn, Pressman advertising has been consistently generating profit across economy cycles. The company has a variety of verticals namely, Digital, Advertising, Design and Public relations. Although majority of revenues are still coming from Advertising, though digital and design is fast picking up. The company has a network of offices and moving forward the company may expand this even further. Given the expansion any incremental increase in revenues will increase the cash position of the company which in-turn means better rewards for the shareholders as the company has low opex and capex. Owing to this the company has wonderful return ratios and is also very cash rich. No wonder this shareholder friendly company is increasing its dividend with every passing year. This expansion coupled with increased advertising spends by its clients (due to better economic activity) should also raise its earnings profile. The promoter holding is very high at more than 74% with very low equity capital.
Valuations: Whereas unique and peerless businesses normally trade at astronomical high double digits or even triple digit valuations, we have this wonderful high dividend paying cash cow small cap available at extremely cheap valuations of around less than 13 PE.
Technical: The company is trading near its lifetime closing highs. Most importantly, inspite of all the mayhem that we witnessed in the markets, the stock is still in the kissing distance of its highs. The stock is rock solid in adverse conditions primarily because of its debt-free status and high dividend yield. Furthermore, the stock is held on to the lower levels of breakout and once it crosses 33 with good volumes, it will mark another strong breakout.
Note: This stock is for people who want to buy low risk stock and are not in a habit of looking at screen everyday. The company is also a nice play
Disclaimer: No holding in the stock, but it is safe to assume that I may or may not invest in future. Also, the above stock view is my personal view in individual capacity. For rest, please look at the About page.