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Just before the general election , many investors are
searching for stocks which may out perform if a stable government came to power
.Since the uncertainty about the outcome is higher we should think about the opposite
side too. What I means is , we should
select stocks which will not under perform if the next government is not a a
stable one ,too.Considering both these situations and the recent run up in many
sectors like Engineering,Infrastructure ..etc ,it is not an easy task to select
a good stock for this purpose.But still there is few stocks available at
reasonable valuation which may out perform in a positive election outcome but
will not fall much even if there is any negative outcome.This week let us
look into one such stock – Kirloskar Oil Engine.
Kirloskar Oil Engine (KOEL) - is the flagship company of Kirloskar
group . Company is the leader in diesel engines,agricultural pump sets and
generators.Company’s operations are broadly classified into four divisions –
power generation,Large Engines,Industrial engines and agri related.Company is a
trusted name in power generator business with its most popular brand ‘Kirloskar
Green’ Genset .In this series company manufacturing gensets with ranges varies
from 5 Kva to 3000 Kva. Large engine division catering mainly shipping industry
and marine applications andmanufacturing propulsion engines (Product range 1060 KWm to 3020 KWm )
.In the agriculture division company supplying diesel engines and pump sets ranging from 3 hp to 130 hp. Company also
making industrial engines in 20 hp to 800 hp category for industrial
applications in mining,material handling ,construction,fluid handling ..etc.
Even if many of these industries were in bad shape due to policy paralysis and
general recession ,company reported consistent performance . After establishing
leadership position in large gensets ,company recently introduced
portable gensets in the lower KVA range.Company also taking efforts to increase its export which
increased 20 % in last year.
KOEL is a company with strong balance sheet and good return ratios .It
is a zeo debt company with good operating cash flow . Company declared 250 %
dividend last year .Promoters holding close to 73 % stake and another 14 % held
by large investors.In last FY ,company reported a top line of Rs.2357 Cr and a
net profit close to Rs.200 Cr .
Recommending Kirloskar Oil Engine as my pre-election pick @ CMP Rs.182
.Stock listed in both exchanges.