ANG Auto Ltd
BSE Code: 530721
CMP: Rs.49 and Rs.53.50
Book Value: Rs.72.84
EPS: Rs.5.78
P/E: 9.26
Industry P/E: 16.46
Market Cap: 67.09 Cr
52-Week High/Low: Rs.62.95/Rs.35.30
It has succeeded in reaching a broader international market in these years. It is one of the largest manufacturers in India of the components used in manufacture of trailer axles, transmission and airbrake systems. More than 55 % of its revenue is derived from exports to quality conscious US and European markets in addition to Australia, Brazil and Mexico, among others. Its brand-enhancing customers comprise Tier-I and Tier-II companies across the world like Arvin Meritor (USA), Alliance Corporation (USA), Zenus Starker–BMW (USA) and Bosch Rexroth (UK), among others. Its manufacturing presence across five facilities covers nearly 250,000 sq. ft. across NOIDA and Faridabad, Sitarganj and Uttranchal (both adjacent to New Delhi, India’s capital). Its shares are listed on the Bombay Stock Exchange, Delhi Stock Exchange, National Stock Exchange and Ahmedabad Stock Exchange.
Shareholding Pattern: The promoters hold 48.38% while the general public holds 51.62%.
Financials: On a consolidated basis, For Q4FY10, the total sales of the company came out to be Rs.124.45 Cr as against Rs.117.2 Cr in the same period previous year. Profit from Operations for Q4FY10, before other income, interest and exceptional items came out to be Rs.14.12 Cr as against Rs.15.24 Cr in the same period previous year. The net profit of the company for Q4FY10 is a whooping, Rs.5.05 Cr as against Rs.81.91 lakhs in the same period previous year. This is on a very small equity of Rs.12.54 Cr. The consolidated EPS of the company for Q4FY10 came out to be Rs.4.03 against Re.0.65 in the same period previous year. Thus there is a significant improvement in the financials of the company in FY10 as compared to FY09.
Triggers:
- The company last year entered into a joint venture to produce and market mobile towers solutions in India. ANG Auto Ltd and TowerWorx, US, have 50:50 stake in the new company known as TowerWorx India (P) Ltd. It is important to note that TowerWorx, US, is the largest mobile tower producer in the US having a large customer base across the globe like AT&T, TMobile and Verizon, among others. The joint venture is expected to reap in good revenues from the telecom companies, in the near future.
- Last month the company received a huge order of Rs.33.37 Cr from L & T MHI - Boilers Pvt. Ltd. for manufacture and supply of boiler support structure for Jai Prakash Power Venture Ltd. for their upcoming power plant at Nigrie, Dist. Singrauli, Madhya Pradesh. The company hopes to garner more such orders in the near future.
- The company attained the ISO and TS-16949 certifications, and is moving to implement the TPM and the TQM standards across all its plants over the coming days.
- It is one of the few companies in the auto-ancillary space in the world to be completely integrated - from the manufacture of components to sub-assemblies and assemblies and finally to vehicles. What makes ANG Auto unique in India among the select few in the world is the convergence of integration and scale revolving around a priority to commission capacities among the top three in the country.
- It has enhanced its value at every intermediate point in the following ways: (i) Through economies of scale, growing volumes to match global standards, (ii) Through the innovation of products enhancing the competitiveness of its users, (iii) Through the manufacture of quality products, leveraging its rich international experience of processes and practices. As a result, ANG Auto quantities, taking the business of its customers ahead. Industries Ltd of today provides international-quality products at Indian cost in growing
- It is important to note that domestic trailer use is still at a nascent stage in India. The government’s thrust on improving road infrastructure and proper implementation of overload restriction for the commercial vehicles is expected to drive the demand for trailers. The container movement volumes have now begun to show some positive momentum.
- India is now a global auto component hub and a significant player in the global automobiles supply chain. It is now a supplier of a range of high-value and critical automobile components to global automobile giants. Moreover, the good point is that the automobile industry is showing signs of revival as CV sales rebounded in FY10 as compared to FY09. Moreover, an investment of around US$15 billion, slated for the auto components sector over the next few years, is expected to drive sectoral growth. The prospects of the domestic auto industry appear optimistic as an increasing number of global automobile OEMs are establishing bases in India. Toyota Motors earmarked Rs.3, 200 Cr investment over 2008-11 for the second plant at Bangalore. Nissan intends to move its small car unit from the UK to India. It is expected that the country will be able to offset China and other Southeast Asian countries' traditional manufacturing advantage in the coming years; taking the industry a step closer to its targeted revenue of US$40 billion by 2014.
- Auto companies have passed on the 2 per cent rise in excise duties duty to the customers and hence they are not affected. Now increase in disposable income of consumers with significant relief on personal taxation in the Union Budget of 2010-11 is expected to drum up the sales of auto majors in the near future—already some signs are being seen in the market. A significant relief on personal taxation front in the Union Budged 2010 could possibly outweigh negative factors. In addition, the excise duty rollback is only one third of the total cut (6 per cent) doled out through the stimulus package. There were no further negative surprises for the Auto Sector in the budget, 2010. It would be important to touch upon other significant budget proposals relevant for auto sector. While corporate income tax rates remained unchanged, reduction of surcharge on domestic companies from 10 to 7.5 per cent would lessen the tax burden. However, Minimum Alternate Tax (MAT) increases from 15 to 18 per cent, will to some extent offset the for eligible companies having an approved in-house R&D unit from 150 to 200 per cent of the expenditure incurred. This would stimulate additional investment in R&D activity paving way for innovation. With the growing trend towards providing advanced driver assistance features, safety and comfort features in vehicles, continuous innovation and adoption of new systems will be vital to retain competitiveness in the automotive industry. Certain companies were required to call back large number of vehicles in recent past due to technology issues. This tax measure could possibly work as a fillip to increase focus on R&D in long term resulting in better technology products. Thus the sector outlook remains strong for the ANG Auto Industries Ltd. benefit due to reduction in surcharge. One of the budget proposals enhances weighted deduction
- To reduce dependence on the auto sector, ANG has ventured into the manufacture of boiler structure for thermal power plants. The Government of India has envisaged capacity addition to the tune of 78,700 MW during the Eleventh Five Year Plan, of which 75.85% is expected to be thermal power capacities. This provides significant optimism to the Company’s business outlook. The Company enjoys a favourable debt-equity-ratio, enabling it to raise further debt in any case of any need.
- The Company enjoyed 46:54 revenue split between domestic and export markets. Off late the company has shifted its focus from the European market to Latin American, the US and other smaller markets and hence it would not affected too much by the European Financial Crisis.
- Constant efforts are being made by the Company to reduce energy consumption, upgrade technology as well as equipment and derive optimum benefits from the present sources. The Company is continuously identifying the scope for improving end use efficiency by evaluating the generation of power increased. In-house training is imparted regularly to plant personnel for adopting technology advancements and cost containment. Further, the Company follows better product improvement, cost reduction, better quality and stability of products. techno-economic viability of various energy conservation measures. The Company’s captive engineering practices, which include reverse engineering processes for enhancing productivity,
- The company has invested Rs 24.98 Cr in a steel fabrication unit for the manufacture of boiler structures for thermal power plants. The trial run has already begun in the company’s unit and soon the commercial production will start. It has also bought back 7,50,000 equity shares at Rs.53.52 per share and 7 mn bonds at a 50% discount on face value.
Chart Check and Conclusion: From the charts it has been found that the stock is just near the 50 and 200 day moving averages which is positive sign for the shareholders and investors in general. From the charts it is further found that MACD, RSI and Candle Stick Patterns are in buy mode. One can buy the scrip above Rs.51.5 for a target of Rs.80 in the medium to long term. In the short term the scrip may move towards Rs.62, where some profit booking is advised.
Disclaimer: Though due care has been taken while preparing this report but no responsibility will be assumed by the author for the consequences what so ever, resulting out of acting on these recommendations or after reading the report. The calls made herein are for informational purposes and are not recommendations to any person to buy or sell any securities. The information is derived from sources that are deemed to be reliable but its accuracy and completeness are not guaranteed. The author does not accept any liability for the use of this column for buying and selling of securities. Readers of this column who buy or sell securities based on the information in this column are solely responsible for their actions. The author, his acquaintances, his company or his family members may or may not have positions in the Scrips mentioned in this column. Investors should take their own decisions while buying and selling the shares/securities.
Note: The stock was recommended on 06-06-10, to the Paid Groups in the Sunday Report sent to them.