When the markets starr ro heat up or are not in a position ro provide a clear signal, it is almost always advisable ro find lesser-known coumers that are expected ro yield decem remrns. Based on this approach, we are recom
mending herewim an auromobile ancillary company called I P Rings (IPRL). The compelling reasons starr from macro facrors like good sales growth in the auromobile secror, an impressive financial performance in HIFYI0, consistem dividend paymem hisrory and a norewormy oudook provided by the managemem.
Furmer, with global car makers targeting India as a small car hub, it can safely be assumed that IPRL will be one of the major beneficiaries. Also, the company has not pledged its shares and mis roo can be coumed as a positive e1emenr. On me valuation from, the coumer ay look expensive bur its strong performance in H2FYI0 is expected ro bring valuations ro bener levels. We recommend mat invesrors should buy the scrip at its currem levels with a rarget price of Rs 90 in the next one year.
A5 regards the business composition, the company manufactures produces such as pisron rings, differemial gears, pole wheels and omer orbital cold formed componems. Bur pisron rings form for a major comriburion ro the ropline with a share of more than 72 per cem. In FY09 me financial performance of the company got impacted in H2 on acCoum of global and domestic economic turmoil. Bur wim the Indian auromobile indusrry showing signs of growth, IPh has revived at a quick pace. This can be seen from the fact mat in HIFYI0 it posted a ropline ofRs 33.30 crore and botromline of Rs 2.71 crore as compared ro Rs 31 crore and Rs 2.13 core respectively in HIFY09.
Furmer, the company's performance in H2FYlO is expected ro be much berrer.
According ro the managemem, the order position appears ro be near normal and this cerrainly is a positive indicaror. The company is confidem mat wim me expected pick-up in me industry mere will be improvemem in capacity utilisation in both the divisions, leading ro better resulrs for the year 2009-10. Based on the amicipation of an improvemem in demand, a much higher production target has been set for me currem year, which the company is confidem will lead ro greater profitability.
A5 regards me other opporrunities, the managemem has stated that, "Since India cominues ro be the focus market for several auromorive players, both global and domestic, for setting up new vemures, this will bode well for me company. This is particularly so in me passenger car segmem wherein India is strongly emerging as a global hub for the production of small cars". With its frontline position in the market, IPRL stands ro benefit a lor. Taking the evolving scenario imo consideration, me company is embarking on a strategy of innovation and has recently emered imo a new technical aid agreemem wim Nippon Pisron Ring Japan for the manufacture of physical vapour deposition (ijVD) rings ro meet the new emission norms for the latest models of auromobile engines. A5 memioned earlier, it has been a consistem dividend paying company and announced a dividend in FY09 despite taking a hit in me bonomline. Now wim FYI0 expected ro be bener, me dividend paymem is expected ro increase. On the valuation from, its CMP of Rs 76 discoums its trailing four quarter earnings by 41x and its EV/EBITDA stands at 8x. But this is on accoum of poor performance in H2FY09. Wim H2FYI0 expected ro be better, me valuations are expected ro improve. Hence we recommend that invesrors should buy the scrip at its currem levels with a target price of Rs 90. ~ (The analyst does not hold any shares in the company)
mending herewim an auromobile ancillary company called I P Rings (IPRL). The compelling reasons starr from macro facrors like good sales growth in the auromobile secror, an impressive financial performance in HIFYI0, consistem dividend paymem hisrory and a norewormy oudook provided by the managemem.
Furmer, with global car makers targeting India as a small car hub, it can safely be assumed that IPRL will be one of the major beneficiaries. Also, the company has not pledged its shares and mis roo can be coumed as a positive e1emenr. On me valuation from, the coumer ay look expensive bur its strong performance in H2FYI0 is expected ro bring valuations ro bener levels. We recommend mat invesrors should buy the scrip at its currem levels with a rarget price of Rs 90 in the next one year.
A5 regards the business composition, the company manufactures produces such as pisron rings, differemial gears, pole wheels and omer orbital cold formed componems. Bur pisron rings form for a major comriburion ro the ropline with a share of more than 72 per cem. In FY09 me financial performance of the company got impacted in H2 on acCoum of global and domestic economic turmoil. Bur wim the Indian auromobile indusrry showing signs of growth, IPh has revived at a quick pace. This can be seen from the fact mat in HIFYI0 it posted a ropline ofRs 33.30 crore and botromline of Rs 2.71 crore as compared ro Rs 31 crore and Rs 2.13 core respectively in HIFY09.
Furmer, the company's performance in H2FYlO is expected ro be much berrer.
According ro the managemem, the order position appears ro be near normal and this cerrainly is a positive indicaror. The company is confidem mat wim me expected pick-up in me industry mere will be improvemem in capacity utilisation in both the divisions, leading ro better resulrs for the year 2009-10. Based on the amicipation of an improvemem in demand, a much higher production target has been set for me currem year, which the company is confidem will lead ro greater profitability.
A5 regards me other opporrunities, the managemem has stated that, "Since India cominues ro be the focus market for several auromorive players, both global and domestic, for setting up new vemures, this will bode well for me company. This is particularly so in me passenger car segmem wherein India is strongly emerging as a global hub for the production of small cars". With its frontline position in the market, IPRL stands ro benefit a lor. Taking the evolving scenario imo consideration, me company is embarking on a strategy of innovation and has recently emered imo a new technical aid agreemem wim Nippon Pisron Ring Japan for the manufacture of physical vapour deposition (ijVD) rings ro meet the new emission norms for the latest models of auromobile engines. A5 memioned earlier, it has been a consistem dividend paying company and announced a dividend in FY09 despite taking a hit in me bonomline. Now wim FYI0 expected ro be bener, me dividend paymem is expected ro increase. On the valuation from, its CMP of Rs 76 discoums its trailing four quarter earnings by 41x and its EV/EBITDA stands at 8x. But this is on accoum of poor performance in H2FY09. Wim H2FYI0 expected ro be better, me valuations are expected ro improve. Hence we recommend that invesrors should buy the scrip at its currem levels with a target price of Rs 90. ~ (The analyst does not hold any shares in the company)
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