Broking House, Angel Broking is bullish on Omax Autos. It has maintained buy rating on the stock.

Angel Broking report on Omax Autos:

Export market,accelerating pace of growth:

"OMAX has been transforming itself from a strong player in the Indian Auto Component Industry to a Global Manufacturer of Sheet Metal Component. OMAX aggressively targeting overseas market and has export order book of Rs 150 crore, which is to be executed in next three years. The company secured orders from Tenneco, Supersporx, Lkea, Delphi, Cummins,Piaggio, for supply of various components. We expect OMAX's export revenue to grow at a CAGR of around 45% between FY2006-FY2009 from Rs 26.6 crore to Rs 80 crore."

Segment diversification:

"OMAX have started diversification from two wheeler parts to four wheeler parts. In line with this, there is plan to put up a new manufacturing unit in the state of Uttranchal. It is talking with Tata Motors to put up a plant for LCV/MCV which can turn to be a positive move for the company and will help in de-risking the product portfolio with reduced dependent on two wheeler segment."

Operating Margins Improving:

"It’s OPM were under pressure largely due to increase in raw material, power and staff cost. However, last two quarters have shown an improvement at OPM which is expected to sustain in coming quarters. The OPM registered a strong improvement of 210 bps YoY and 10 bps QoQ due to lower operating cost. The margin is expected to expand further in the medium term on account of various cost control measures initiated by the company."

Valuation:

"At the current market price of Rs 86, the stock is trading at a P/E of 8.3xFY2007E earning and 6.8x FY2008E earnings. The stock has corrected very sharply in the recent past and appears very attractive at EV/EBIDTA of 4.4xand PEG ratio of 0.8 on FY2007E earnings (less than 1 PEG ratio indicate that the stock is trading at discount) and has potential upside of around 20%. Hence, we recommend a buy on the stock with target price of Rs.105."