Buy Ahmednagar Forgings, Amtek Auto: Prakash Diwan

Prakash Diwan of Altamount Capital told CNBC-TV18, "Ahmednagar Forgings was a little bit of surprise in yesterday’s session. If you look at what the company is trying to do the entire Amtech twin setup is globalising itself in a significant way. I mean they are not worried about debt because the kind of volume that they will see is significant. They are talking about like almost like 20-25 percent of jump on topline growth which is already they are doing so well and if they were to kind of scale up it is going to be significant. However it is in the right timing that if interest rates were to come down the leverage will also accelerate downwards and that is going to be very well.

He further added, “The other thing they will do is they will almost monopolise certain original equipment manufacturer (OEM) relationships which is where margins improve dramatically. In the auto business if you have one or two or three suppliers you really don’t make too much money. However if you are the only guy who can do it well to a particular OEM and a complex product line there you have it. So, that is exactly what they are trying to do. That is why they are acquiring companies at almost like a premium or sorts.”

“It is difficult to make out how the business will get divide between the two of them, so it would make sense to buy Ahmednagar Forgings and Amtek Auto right now,” he said.