Buy Wendt; target of Rs 1958: Firstcall Research

Firstcall Research is bullish on Wendt (India) and has recommended buy rating on the stock with a target of Rs 1958 in its June 12, 2012 research report.

“Wendt (India) Limited (WIL) was incorporated in 1980 as a Joint Venture between Wendt GmbH and The House of Khataus. In1991, Carborundum Universal Ltd (CUMI), a US$ 3.0 Billion. Murugappa Group Company acquired the Khatau’s stake in the business. Since then WIL has been a 40 - 40 Joint Venture between Wendt GmbH and CUMI. The public holds the balance 20% equity. Wendt India is ranked among the Top 25 successful Indo-German JVs by the Indo-German Chamber of Commerce (IGCC). The company technology leaders in Super Abrasive products - manufactures a wide range of Diamond/CBN Grinding Wheels and Tools. These products are find applications in industries like Automobile, Cutting Tools, Engineering, Bearing, Aerospace, Steel, Defense, Refractory, Ceramic, Glass, Textile etc. And also provides high precision and high performance specialized CNC Rotary Surface Grinding Machines, Wheel Profiling and Dressing Machines, Precision Honing Machines, Guide Roll Grinding and Special Purpose Grinding Machines. Companies refurbish Insert Grinding Machines too.”

“Wendt India draws its Technological Superiority from Wendt GmbH which is a part of Winterthur Technology Group (WTG) Switzerland and Sound and Ethical Management practices from Murugappa Group. While Wendt GmbH-the pioneers in Super abrasive tooling solutions and high precision grinding machines for Insert grinding and Steel industries for over 8 decades, the 100 year Murugappa Group is the market leader in diverse businesses such as Engineering, Abrasives, Finance, General Insurance, Cycles, Sugar, Farm Inputs, Fertilizers, Plantations, Bio-products and Nutraceuticals having 29 companies with manufacturing facilities spread across 13 states in India. The group is among the fastest growing diversified business houses in India. The company known for its diversified and impressive Product Portfolio, Innovation strategy, strong Product Development, Personalized technical services and providing Technology Solutions in Grinding to 750+ direct customers in the domestic market. Company believes in direct sales to its customers who are serviced through highly trained application oriented sales engineers located in all major Industrial cities across India. Exports constitute over 30% of Wendt India’s total business.”

“WENDT (INDIA) LTD has reported net profit of Rs 40.50 million for the quarter ended on March 31, 2012 as against 37.80 million in the same quarter last year, an increase of 7.14%. It has reported net sales of Rs 284.50 million for the quarter ended on March 31, 2011 as against Rs 240.20 million in the same quarter last year, a rise of 18.44%. Total income grew by 17.67% to Rs 286.40 million from 243.40 million in the same quarter last year. During the quarter, it reported earnings of Rs 20.25 a share.”

“At the current market price of Rs 1748, the stock is trading at 15.81 x FY13E and 14.19 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.110.56 and Rs.123.20 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 15% and 14% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 9.49 x for FY13E and 8.52 x for FY14E. Price to Book Value of the stock is expected to be at 3.57 x and 2.86 x respectively for FY13E and FY14E. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 1958 for medium term investment,” says Firstcall Research report.   

Non-Institutions holding more than 90% in Indian cos

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