Saturday, January 17, 2015
The leading sector may change in each and every leg of bull market .Considering the possibility of multiple favorable factors like fall in Petrol/Diesel prices , decline in interest rate, reduction in raw material cost ..etc ..etc , auto sector may emerge as a winner in future . If this sector benefit from the emerging scenario, surely there will be positive impact on auto component makers too. This week let us look into one such good company-SAMKRG PISTONS & RINGS LTD- which is still attractively priced .This is one company benefiting from the sale of any of the brands like Honda Motors,Bajaj, TVS,Piaggio,Mahindra Two wheelers, Hero Motors, Force Motors..etc.( All these companies are clients of Samkrg Pistons.)
This Hyderabad based company manufacturing Pistons, Piston Pins & Piston Rings for Scooters, Motorcycles, Cars, Tractors, Light Commercial Vehicles, Stationary Engines and other special applications. Company selling its products under the brand ‘Sam Pistons &Rings’ .Manufactured with Japanese and German technology , Samkrg supplying these products to all major OEM’s . In addition to OEM supply , company selling its products in Replacement Market & Exports.Company’s success in exports to developed countries like UK, France, Germany and EU showing the quality of products manufactured by Samkrg .Company succeeded to increase its export share to total sales in past many years and now the same stands around 20 % of total sales.Since majority of my readers are well aware about its products and the business is easy to understand I am not explaining much about that . In nut shell , company is one to benefit with the growth of automobile industry and many of the top brands in our country are using Samkarg’s products.
In addition to their good relation with top brands ,the major reasons to select Samkrg from many other auto component makers includes the strong balance sheet,liberal attitude towards share holders,steady growth over past many years ..etc. Company’s balance sheet is fair with very lower level of debt , good cash flow ..etc and they are distributing their profit with minority share holders as dividends in the range of 25-50 % .In last year company reported a top line of Rs.206 Cr , EPS of Rs.11 and a CEPS of Rs.21.5 . Traditionally the December quarter is bit muted but I believe company can report about 40% growth in bottom line in this FY.
The below table showing company's last few year's performance ( Rs.in lacs)
It is clear that the performance of company were satisfactory even during the most tough time of auto industry . I hope, it will perform well going forward at a time there are many positives for the industry ,as indicated at the beginning. As against last full year's EPS of Rs.11 and CEPS of Rs.21.50 , company already reported an EPS of Rs.7.75 and CEPS of Rs.13.30 in the first half itself of this FY .This is one preferred pick from auto component industry and I believe there is lot of steam still left in this piston in long term .Stock is currently trading around Rs.163 and listed only in BSE .
Link to Company Website HERE
Link to latest Annual Report HERE
Discl: Holding shares of SPL