We recommended Singer India in Jan 2013 at the price of Rs. 98. The current market price is Rs. 155. ProsperoTree recommendation of Singer India has delivered 58% returns since the first recommendation.  At this stage, we recommend to completely book profits in this stock.

Our investment premise was based on Singer India’s strong brand recall, possibility of revival in sales & improvement in margins and, securing an exit from BIFR. Most of these themes have played out over the past eighteen months - Singer India exited BIFR in March’13 and commenced production at J&K factory in July’13, sales grew at a CAGR of 25% over FY12-14 and gross margins stabilized at 20%.

Our exit call is based on assessment that further margin improvement for Singer India will remain challenging and earnings trajectory may not keep pace with sales growth. In this light, the current valuations at 20x FY14 P/E are fair and risk reward does not look too promising.
We recommend an EXIT at Rs. 155 with gains of 58% in 20 months.

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