Superhouse Ltd ..... on the house?

I am currently analyzing Superhouse Ltd. (BSE: 523283, http://www.superhousegroup.com), a manufacturer and exporter of leather goods based out of Kanpur, India.

The stock is currently quoting at Rs. 56 (having gained 16% in the last one month). Let us analyze the available information and see what makes it interesting?

+ Sales have increased 3.4 times ( Rs. 136 crore to Rs. 463 crore) across the last 10 years
+ Current Assets (at Rs. 231 crore) are 1.64 times more than current liabilities (at Rs. 141 crore)
+ Debt-equity ratio (at 0.74) is less than 1
+ No loss in the last 10 years and net profit increased 3.3 times (from Rs. 5.8 to Rs. 19 crore)
+ 10-year EPS CAGR of 9.27% (from Rs. 7.02 to Rs. 17.38)
+ A modest book value increase of 1.75 times (Rs. 73.58 to Rs. 129.19) across 10 years
+ Continuous dividend payout for the last 7 years
+ Unchanged promoter holding of 54.5% across last 3 years

Based on TTM data, this works out to P/BV of 0.43, P/E of 3.22 and Earnings yield of 31%. Summary - a whopping 214% Margin of Safety!

A few additional points of note:

+ No shares have been pledged by the promoters

-  I normally like companies that post all the financial information on their websites and more so those which show a "10-year Financial Highlights" snapshot. It shows they are not hiding anything. Now, with Superhouse Ltd., I could not find much data, at least latest data. Annual reports are available only for 2006,2007 and 2008. No information, not even the quarterly results for the last four years!

+/- Analysis of the Balance Sheet showed that Reserves and Net Worth are continuously increasing but so are the loans

+/- The Profit & Loss statement shows that the Operating Profit Margin is only 11% and the Net Profit Margin is only 4%! Additional mention - no out of place extra-ordinary items

- Analysis of the Cash Flow Statement brings out an interesting observation. Net Cash from Investing Activities is always (for the last 10 years) negative, meaning the company is burning cash in investing activities. Example: in 2012, the company made Rs. 36.57 crore from Operating activities and Rs. 5.40 crore from Financing activities but lost Rs. 40.69 crore from Investing activities. And this seems to be a habit!

Finally, from a pure cigar-butt point of view (reasonable financial stability + margin of safety), this is a go ahead but might not be a wonderful business with a forever holding period.

Conclusion: I am accumulating till I reach my diversification target.

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