Steel Exchange

An MNC, the company makes generators, engines, farm equipment and operates in two spaces- agri equipments and power generation space such as water pumps. In Q2FY12, the company had an exceptional gain of Rs.20.49 crore due to sale of its Rudrapur plant at Uttarakhand and in that context, the YoY, performance, vis-à-vis Q2FY13 looks pale. Though topline (YoY) rose 15% at Rs.127 crore, net profit came in at Rs.5.39 crore, down from 23.19 crore in previous year Q2. But if we look at the numbers sans the exceptional income in Q2Fy12, then the current Q2 performance does look very good. QoQ, net profit has shown a rise of 11%. The base effect is sure to play it up through the entire of current fiscal.

This is a debt free company and its cash balance is at Rs.62 crore. The company has always been a generous dividend payer and in FY12, it paid dividend at 90% and 75% in FY11. Its market cap currently stands at Rs.569 crore thus giving us an enterprise value of Rs.507 crore and this means it is ruling at a PE multiple of less than 0.5 times on EV basis on the H1FY13 topline at Rs.239 crore. As at 30th Sept 2012, Honda Motor held 66.67% stake and Usha International holds 1%, taking total promoters holding at 67.67%.