Firstcall Research is bullish on Wheels India and has recommended buy rating on the stock with a target of Rs 982 in its October 09, 2014 research report.
Firstcall Research report on Wheels India
“Wheels India (established in 1962) is one of the largest steel wheel manufacturers in the world. The company had turnover of USD 375 Million (FY 2012-13) coming from the segments of Cars/ UVs, Commercial vehicles, Tractors, Single Piece wheels and Construction & Earth Mover wheels. The company also manufactures air suspension kits for trucks and buses. With over 15 % of its turnover coming from exports, particularly from the Construction & Earth Mover equipment segment, it is truly a global player in the auto components industry. Wheels India started production of wheels for commercial vehicles in 1962 at company plant in Padi, Chennai. The company started the production of car and tractor wheels in Padi in 1965. In 1972, the company made a foray into the construction equipment sector with Hindustan Motors (now CAT India). In 1982, the company opened its second facility in Rampur for tractor wheels. Wheels India entered the wire wheel business in 1988 and also entered the air suspension market under the brand “WILRIDE”. In 1998, the company opened a facility in Pune to cater to this growing automotive hub. This facility manufactures wheels for car, trucks and busses. The 2000s represented a decade of growth for the company and 2000 marked its entry to the earth mover market with 35” and 49” wheels. In 2005 the company started manufacturing forged aluminium wheels to cater to the growing after market for truck and trailer manufacturers. 2007 marked the setup of 2 new facilities in Sriperumbudur for Big EM wheels and Bawal for car wheels. In 2009 the company setup a new facility in Pantnagar to cater to the growing truck and light commercial vehicle business. Wheels India is a partner to various Global OEMs like Ford, Hyundai, Tata, Caterpillar, John Deere, Komatsu, Hyundai Heavy Industries, Case New Holland, Leyland, Tafe and Suzuki.”
“At the current market price of Rs.892.95, the stock P/E ratio is at 31.91 x FY15E and 27.50 x FY16E respectively. Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs. 27.98 and Rs. 32.47 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 6% and 7% over 2013 to 2016E respectively. On the basis of EV/EBITDA, the stock trades at 7.63 x for FY15E and 7.00 x for FY16E. Price to Book Value of the stock is expected to be at 2.70 x and 2.46 x respectively for FY15E and FY16E. We recommend ‘BUY’ in this particular scrip with a target price of Rs.982.00 for Medium to Long term investment,” says Firstcall Research report.
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