Buy SML Isuzu; target of Rs 531: Firstcall Research

Firstcall Research is bullish on SML Isuzu and has recommended buy rating on the stock with a target of Rs 531 in its November 16, 2012 research report.

“SML ISUZU Limited manufactures and sells light commercial vehicles for goods and passenger applications in India. Swaraj Mazda, incorporated in 1983 as Swaraj Vehicles, is engaged in manufacturing of vehicles for goods and passenger applications. In 1984 the company entered in a joint venture with Punjab Tractors, Mazda Motor Corporation and Sumitomo Corporation, Japan for the manufacture of light commercial vehicles (LCVs). Thus the name of the company was changed to Swaraj Mazda. Recently the company name changed to SML ISUZU Limited early name was Swaraj Mazda Limited on January 4, 2011. SML ISUZU Limited was founded in 1983 and is based in Chandigarh, India. SML ISUZU Limited operates as a subsidiary of Sumitomo Corporation. Company manufactures a range of vehicles such as trucks, buses and ambulances. The company has launched products like 4WD, Samrat, Sartaj, Dual Cab, Supreme-8 tonner, Truck- Super 12, Super ALFD and many more. In 1992, the company has supplied 500 trucks to the defence. Over the years it has built up a wide product portfolio covering regular as well as niche segment needs. The company exports its products to various countries like Bangladesh, Kenya, Tanzania, Nepal, Zambia, Ghana, Ivory Coast, Rwanda, Seychelles Syria and Jordan.”

“SML ISUZU Limited manufactures and sells light commercial vehicles for goods and passenger applications in India, reported its financial results for the quarter ended 30th Sep, 2012. The second quarter witnesses a healthy increase in overall sales as well as profitability of the company. The company’s net profit jumps to Rs.129.30 million against Rs.118.70 million in the corresponding quarter ending of previous year, an increase of 8.93%. Revenue for the quarter rose 5.75% to Rs.2629.10 million from Rs.2486.20 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.8.93 a share during the quarter, registering 8.93% increase over previous year period. Profit before interest, depreciation and tax is Rs.244.30 millions as against Rs.212.40 millions in the corresponding period of the previous year.”

“At the current market price of Rs 470, the stock P/E ratio is at 14.12 x FY13E and 12.65 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.33.29 and Rs.37.16 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 13% and 14% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 7.37 x for FY13E and 6.43 x for FY14E. Price to Book Value of the stock is expected to be at 2.35 x and 1.98 x respectively for FY13E and FY14E. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 531 for medium to long term investment,” says Firstcall Research report.   

Non-Institutions holding more than 90% in Indian cos

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