Buy Atul Auto; target of Rs 136: Sunidhi Securities

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Buy Atul Auto; target of Rs 136: Sunidhi Securities

Sunidhi Securities is bullish on Atul Auto and has recommended buy rating on the stock with a target of Rs 136 in its September 19, 2011 research report.

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Sunidhi Securities is bullish on Atul Auto and has recommended buy rating on the stock with a target of Rs 136 in its September 19, 2011 research report.

"AAL was incorporated as a private limited company in Jun.'86 and converted into a public limited company in Aug.'94. Its plant is at Shapar (Rajkot), Gujarat with a production capacity of 24,000 vehicles p.a. (single shift basis). AAL also manufactures 3-wheeler front engines. The plant is equipped with CNC machine shop, fabrication shop, paint shop, test house etc. Its R&D Center is located at Pune. AAL has its own wind turbine generators of 1.85 MW capacity at Village Soda, near Jaisalmer, Rajasthan for generation and distribution of power."

"ALL is keen to collaborate with a company whose technology will help it manufacture light commercial vehicles (LCVs). The technical team of AAL is evaluating product configuration and commercial aspects of the proposal. The company has started hunting for the land. AAL has tied up with Bangladesh based Atul Autos Bangladesh to promote the sales of the vehicle manufactured by AAL in Bangladesh. ALL has also signed an MoU with Punjab National Bank to provide auto financing to all products of the company across the country."

"AAL is one-stop provider of three-wheeler needs. Over the years, it has made it versatile platform highly customizable to suit almost every kind of need and budget.  AALRss record-high earnings, strong balance sheet and solid management outlook for the current fiscal will act as positive catalysts in the long run. Moreover, the growing popularity of Atul 3-wheelers and expansion coupled with diversification plans to roll out LCVs in the future will drive the stock upward.  AAL is expected to post an EPS of Rs19.50 in FY12. At the CMP of Rs98, the share is trading at a P/E of 5.0 against the industry average of 12.5 for the two-and-three wheeler industry. We recommend BUY with a target price of Rs135 at which the share will trade at a P/E of 7.0," says Sunidhi Securities research report.  

Shares held by Insurance Companies

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To read the full report click on the attachment