The company makes various auto components like parking brake, gear shifter, chassis, and exhaust system for two-wheeler and three-wheeler. They have a list of clients for the two-wheeler and three-wheeler makers. The company has six plants.
They don't have much of pricing power. But, they have been moving smartly with an increase in the topline by about 50%. If we see the performance of the company for FY10 or nine months of FY11, the PAT margin has improved by 1%, from 6% to 7%. The topline has grown close to 45%.
If the company has an increase in topline by about 40-45% with an improvement in the margins, they have a very good advantage. They have six plants scattered all over the country which caters to their requirement of their OEM purchasers.
If we see the financial performance of the company, it is likely to post an EPS of close to about Rs 33-34 for FY11. This will translates into a PE multiple of about 4.5-4.6. It is totally a debt free company. The market capitalisation of the company is quite low.
The company has a promoter holding of 51% and the market capitalisation is less than Rs 200 crore. The company's topline of Rs 600 crore is very attractive due to their volume growth and margin expansions compared to any other auto ancillary.
The share is now ruling close to about Rs 135-136, which can easily move to about Rs 175 in the next six-eight months' time.
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