CARE maintains fundamental grade of 4/5 to Amtek Auto

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CARE maintains fundamental grade of 4/5 to Amtek Auto

CARE Research has come out with its report on Amtek Auto (AAL). The research firm has assigned a valuation grade of 3/5 and fundamental grade of "4/5" to the company, in its July 11, 2011 report.

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CARE Research has come out with its report on Amtek Auto (AAL) . The research firm has assigned a valuation grade of 3/5 and fundamental grade of "4/5" to the company, in its July 11, 2011 report.

Strong growth in top-line
AAL reported 9MFY11 revenues of Rs. 3,449 crores, registering a growth of 28 per cent y-o-y. Growth in top-line can be attributed to the robust growth in demand from the automobile segment which accounts for about 80 per cent of the AAL's revenue. CARE Equity Research sees a moderation in the demand from the automobile industry going forward.

Margins witness improvement
Both EBITDA and PAT margins witness an improvement in 9MFY11. EBITDA stood at Rs. 881 crores, - up 36 per cent, while PAT for AAL stood at Rs. 282 crores in 9MFY11 - up 61 per cent y-o-y. Higher capacity utilization and operational efficiencies resulted in increased margins. Going forward, the profit margins are expected to be in similar range.

Valuation
CARE Equity Research assigns valuation grade of 3/5 to Amtek Auto Limited (AAL) based on the Current Intrinsic Value (CIV) of Rs. 178 as against Current Market Price (CMP) of Rs 168 on 11th July 2011, indicating that shares of AAL are 'Fairly Priced'. The CIV of Rs. 178 per share, of AAL has been arrived using the Discounted Cash Flow (DCF) methodology, says CARE Equity Research report

Disclaimer: This report is prepared by CARE Research, a division of Credit Analysis & REsearch Limited [CARE]. CARE Research has taken utmost care to ensure accuracy and objectivity while developing this report based on information available in public domain or from sources considered reliable. However, neither the accuracy nor completeness of information contained in this report is guaranteed. CARE Research operates independently of ratings division and this report does not contain any confidential information obtained by ratings division, which they may have obtained in the regular course of operations. Opinions expressed herein are our current opinions as on the date of this report.

CARE's valuation of the security is mainly based on company specific fundamental factors. Equity prices are affected by both fundamental factors as well as market factors such as - liquidity, sentiment, broad market direction etc. The impact of market factors can distort the price of the security thereby deviating from the intrinsic value for extended period of time. This report should not be construed as recommendation to buy, sell or hold a security or any advice or any solicitation, whatsoever. It is also not a comment on the suitability of the investment to the reader. The subscriber / user assumes the entire risk of any use made of this report or data herein. CARE specifically states that it or any of its divisions or employees have no financial liabilities whatsoever to the subscribers / users of this report. This report is for personal information only of the authorised recipient in India only. This report or part of it should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person, especially outside India or published or copied for any purpose.

To read the full report click on the attachment