Buy Shivam Autotech; target of Rs 149: Firstcall Research

Firstcall Research is bullish on Shivam Autotech and has recommended buy rating on the stock with a target of Rs 149 in its August 17, 2012 research report.

“Shivam Autotech Limited, formerly known as Munjal Auto Components Ltd, is a Hero Group company based in New Delhi. The Hero group has two flagship companies under it Hero Honda Motors Limited world’s Largest Two-wheeler Company & Hero Cycles Limited world’s largest in bicycles manufacturing. It has employee strength of 800 members it manufactures and markets auto components to an original equipment manufacturer. Apart from Hero Honda its clients include BOSCH, HILTI etc. It is among the auto component manufactures which uses the Near Net Shape Technology for cold and warm Forging.”

“Shivam Autotech Ltd known as Munjal Auto Components (MAC) is a fully fledged autonomous wing of the HERO Group, reported its financial results for the quarter ended 30 June, 2012. The first quarter witness a healthy increase in overall sales as well as profitability of the company. The company’s net profit jumps to Rs.76.36 million against Rs.42.73 million in the corresponding quarter ending of previous year, an increase of 78.70%. Revenue for the quarter rose 23.93% to Rs.996.77 million from Rs.804.33 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.7.64 a share during the quarter, registering 78.70% increase over previous year period. Profit before interest, depreciation and tax is Rs.255.74 millions as against Rs.178.28 millions in the corresponding period of the previous year.”

“At the current market price of Rs.131.60, the stock P/E ratio is at 5.76 x FY13E and 4.96 x FY14E respectively. Earnings per share (EPS) of the company for the earnings for FY13E and FY14E are seen at Rs.22.84 and Rs.26.55 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 20% and 21% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 1.31 x for FY13E and 1.17 x for FY14E. Price to Book Value of the stock is expected to be at 0.96 x and 0.80 x respectively for FY13E and FY14E. We expect that the company surplus scenario is likely to continue for the next years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 149 for medium to long term investment,” says Firstcall Research report.  

Non-Institutions holding more than 90% in Indian cos

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