Shivam Autotech in the limelight

Shivam Autotech is doing pretty well on the bourses, going up almost 4% to Rs.66.40 though volumes remained muted. Its 52-week high and low stands at Rs.108.15 and Rs.50.20 respectively.

The buzz around the stock is high because it reported an 8% (YoY) rise in its monthly sales for May’18.

The company had ended Q4FY18 with a loss of Rs.10 crore v/s profit of Rs,.2  crore in previous Q4 on a 24% rise in total income at Rs.146 crore. A 25% increase in expenses pushed the company into the red.

Shivam Autotech, a part of Satyanand Munjal Group and having emerged post hive off from Munjal Auto, focuses mainly on forging and machinery division and has strong linkage with Hero Moto. The company’s business profile is strongly linked with Hero Moto, which is the largest customer of Shivam Autotech and accounted for approximately 68% of revenue in FY17. Most of the manufacturing plants of Shivam Autotech are located in the vicinity of Hero Moto’s manufacturing plants. Also, Shivam Autotech has been expanding its capacity in recent past, in order to meet the demands of Hero and also tap other clienteles. During FY16-18, the company has developed two new facilities viz. in Bengaluru for manufacturing of automotive gears and shafts for HML and other OEMs and another in Rohtak for power tools, making company’s presence Pan India, across 5 strategic locations, including Gurgaon, Haridwar, Manesar, Bengaluru and Rohtak. Due to higher capex, company’s debt and finance cost are at elevated levels, but as capacity expansion is now completed (capex of Rs. 175 crores), the company will reap the benefits of higher operating leverage and will be able to hopefully  improve its bottomline along with topline in the coming months.