Buy FIEM Industries; target of Rs 225: Firstcall Research

Firstcall Research is bullish on FIEM Industries and has recommended buy rating on the stock with a target of Rs 225 in its April 1, 2013 research report.
 
“Fiem Industries Ltd is one of the leading manufacturers of automotive lighting & signaling equipments and rear view mirrors. The major business comes from the two-wheeler segment of the vehicle industry. It has a wide range of lighting systems and rear view mirrors, sheet metals parts and plastic components for two and four wheeler our diversified products portfolio ranging form rear view mirrors, head lamps, tail lamps, roof lamps, wheel covers, warning triangle, complete rear fender assembly, frame assembly, mudguards and various sheet metal & plastic parts etc. is capable of catering to the needs of almost all segments of automobile industry viz., four-wheelers, LCVs, HTVs and tractors. The existing plants are located at Kundli (Sonepat, Haryana) (Unit I), Hosur (Tamil Nadu) (Unit II & III) and Mysore (Karnataka) (Unit IV). Our upcoming units will be located at Hosur (Tamil Nadu) (Unit V) and Nalagarh (Himachal Pradesh) (UnitVI).”
 
“The proximity of our plants to OEM customers offers logistic support are savings to valued customers and further enables up comimg unit Rai (Haryana) to cut our inventory carrying costs. The opportunity of been associated with some of prestigious OEM customers to start of their operation in India. FIEM has acquired certifications such as ISO 9002, QS 9002, QS 9000, ISO/ TS 16949:2002, & ISO 9001. It has also acquired certification for conformity of production form RDW Netherlands. FIEM has also been accredited with ISO14001-2004 Certification for Environment Management Systems. FIEM employees are constantly being trained to meet the customer's specific requirements as per TQM. FIEM has become a Tier I Supplier not only in India but also in Europe and USA.”
 
“Fiem Industries Ltd has experience of 35 years in automotive components industry and is one of the pioneers of the automotive components industry in India, reported its financial results for the quarter ended 31 DEC, 2012. The Third quarter witnesses a healthy increase in overall sales as well as profitability of the company. The company’s net profit jumps to Rs.66.16 million against Rs.50.46 million in the corresponding quarter ending of previous year, an increase of 31.11 percent. Revenue for the quarter rose 9.31 percent to Rs.1501.07 million from Rs.1373.28 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.5.53 a share during the quarter, registering 31.11 percent increase over previous year period. Profit before interest, depreciation and tax is Rs.177.56 millions as against Rs.172.04 millions in the corresponding period of the previous year.”
 
“At the current market price of Rs.199.50, the stock P/E ratio is at 9.53 x FY13E and 8.35 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.20.94 and Rs.23.88 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 16 percent and 36 percent over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 5.48 x for FY13E and 5.01 x for FY14E. Price to Book Value of the stock is expected to be at 1.41 x and 1.21 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 225 for medium to long term investment,” says Firstcall Research report.

Public holding more than 90% in Indian cos

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