Munjal Showa has target of Rs 85, says SP Tulsian, sptulsian.com. This is a company in technical and financial collaboration with Showa Corporation of Japan who are holding 26 percent stake in the company and 39 percent stake is held by the Munjals, with about 65 percent as the promoter stake.
Munjal Showa has target of Rs 85, says SP Tulsian, sptulsian.com.
Tulsian told CNBC-TV18, "Munjal Showa has posted very good numbers yesterday. They are making the shock absorbers and struts for two wheeler and four wheelers and their clientele are Hero Moto, Maruti, Honda Motorcycles, Honda Siel Motor and all other automobile players those who are into two wheeler and four wheeler space.”
He further added, “This is a company in technical and financial collaboration with Showa Corporation of Japan who are holding 26 percent stake in the company and 39 percent stake is held by the Munjals, with about 65 percent as the promoter stake.”
“If I go by their top-line of close to about Rs 1,185 crore for first nine months, the top-line is equally broken in three quarters Rs 390 crore in each quarter. Even for Q3 they had a top-line of Rs 390 crore. If you really go by the profit performance, the profit has been really very good. The company which had a PAT of Rs 39 crore for the nine months, of that Rs 16 crore has come in Q3 that means 40 percent of that has come in Q3 alone and similar is the story with the EPS also, Rs 9.60 EPS in first nine months of which Rs 4 EPS has been posted in the Q3 alone.”
“So I expect that maybe probably the company is now improving their profit margin and maybe the top-line will also start increasing going forward. They should be able to post a top-line of close to about Rs 2,000 crore going forward for FY14. FY13 will be having a top-line of close to about Rs 1,600 crore with EPS of Rs 14. But for FY14 I am expecting that EPS could be about Rs 17-18 and if you really go by the PE multiple it is sub-4. Even the book value is quite good. As I said the promoter stake of 65 percent is quite good.”
“So taking all this into consideration this seems to be a safe auto ancillary stock, which can give you a low but steady kind of return with a price target of about Rs 85 in next 12 months or so.”
Disclosure: I have no holding or interest in the stock discussed.The Great Diwali Discount!
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