Clutch Auto a 36 years young manufacturer of 500 different types of clutch discs and assemblies ranging from sizes of 160-420 mm has 60 % of the Indian market.It is an OEM supplier to Maruti, M& M ,Tata Motors, Eicher, Mazda,PTL,Bajaj,Escorts,BEML and to ordinance factories for Military tanks. Clutch Auto produces over 20 lakh clutches every year. Its an R & D driven organisation with 16 patents as of date in India and USA to its credit..Clutch Auto acquired clutch divison of Pioneer Inc,in US to strengthen its position in US market.Supplying to Pioneer’s clients with the Pioneer brand name which will further help the company to penetrate easily in US markets. Its QS 9000 certified company with factories in Delhi and Haridwar.In Delhi the factory is located in NCR region on Mathura Road on a plot of 30,000 sq. meters.Company’s Financials on YOY basis are showing more than 50 % growth in both top and bottom lines.
Clutch Auto reported a 11% rise in net sales for Q2FY08, over Q1FY08  mainly supported by rising sales from domestic market. It achieved net sales of Rs 50.4 crore, with domestic sales contributing Rs 40 crores (up 14 %) and export sales of Rs 10 crore (up 2 %). Net profit growth was restricted to 7.7% due to higher interest outgo. The company reported net profit of about Rs.4 crore, translating into an EPS of Rs 2.5 for Q2 on diluted equity of Rs 16.3 crore.During the last quarter Q1FY08 , 800,000 equity shares were allotted on conversion of warrants on preferential basis, increasing equity capital to Rs16.3 Crore.The company is planning to manufacture some of its products from its new plant at Haridwar (Uttaranchal), which attracts tax benefits.The company is trying to enter into A and B segment vehicles. It also plans to focus on exports especially to US and this is expected to pick up in coming months.
At CMP of Rs.115 Co’s mkt cap. is less than Rs.190 crores.With the new factory at Haridwar getting commissioned, there is a distinct possibility that the Co. may sell its factory land on the periphery of New Delhi and get compensation in excess of its present market cap.. By relocating the entire factory to Haridwar the Co.will avail of tax benefits in addition to nil interest outgo .This will improve the bottomline atleast two fold.One can expect an EPS of Rs.25 in the next 2 years and a share price of Rs. 250 in LT.
Buy at CMP of Rs. 115 with 2 years HOLD is recommended .
No comments:
Post a Comment