Buy Automotive Axles; target of Rs 575: Firstcall Research
Firstcall Research is bullish on Automotive Axles and has recommended buy rating on the stock with a target of Rs 575 in its May 10, 2012 research report.
Firstcall Research is bullish on Automotive Axles and has recommended buy rating on the stock with a target of Rs 575 in its May 10, 2012 research report.
“Automotive Axles Limited (AAL) established in the year 1981, is a joint venture of Kalyani Group and Meritor Inc., USA (formerly the automotive division of Rockwell International Corporation). With manufacturing facilities located at Mysore, the company is currently the largest independent manufacturer of Rear Drive Axle Assemblies in the country. Over the years, AAL has developed an impressive domestic OEM clientele that includes Ashok Leyland, Tata Motors, Asia Motor Works, Vehicle Factory-Jabalpur, BEML, Man Force Trucks Pvt. Ltd., Mahindra Navistar, Volvo India and SML Isuzu Ltd., VE Commercial Vehicles, Corona Bus Mfrs., and Godrej. Automotive Axles Ltd exports its parts to USA, France, Italy, China, Brazil, and Australia.”“The infrastructure at AAL spans highly specialized manufacturing processes involving Friction Welding, CO2 Welding, CNC Machining, Flexible Machine Centres and a range of specially built machines for production of Axles and Brakes. The facilities also comprise Gleason Gear Manufacturing Equipment backed by a modern Heat Treatment Shop including Continuous Carburizing and Sealed Quench Furnaces. Wide range of Rear Drive Axles catering to commercial vehicles ranging from 6 Tons to 35 Tons GCW, S-Cam Actuated Quick Change Air Brakes for commercial vehicles, and Trailer Axles for 10 Tons to 13 Tons GVW. Automotive Axles Ltd a Quality Management System that is certified to ISO/TS 16949:2009 standard and also Environmental Management System that is certified to ISO 14001:2004 standards.” “Automotive Axles Ltd has reported net profit of Rs 192.56 million for the quarter ended on March.31, 2012 as against 97.65 million in the same quarter last year, an increase of 97.19%. It has reported net sales of Rs 2995.34 million for the quarter ended on March 31, 2012 as against Rs 1794.64 million in the same quarter last year, a rise of 64.68%. Total income grew by 65.49% to Rs 2971.27 million from Rs.1795.45 million in the same quarter last year. During the quarter, it reported earnings of Rs 12.74 a share.” “At the current market price of Rs 500, the stock is trading at 10.14 x FY12E and 8.37 x FY13E respectively. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs.49.31 and Rs.59.74 respectively. Net Sales and PAT of the company are expected to decrease at a CAGR of 31% and 27% over 2010 to 2013E respectively. On the basis of EV/EBITDA, the stock trades at 5.25 x for FY12E and 4.43 x for FY13E. Price to Book Value of the stock is expected to be at 2.37 x and 1.85 x respectively for FY12E and FY13E. 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 575 for medium to long term investment,” says Firstcall Research report. Public holding more than 90% in Indian cos Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.To read the full report click on the attachment 
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