The key financials of Electrosteel Castings are enclosed -
Share capital - Rs. 20.7 crores
Loans - Rs. 385.6 crores
Net Current Assets - Rs. 560.0 crores
FV - Rs. 10 per share
Dividend - 12.5 rupees per share
CMP - 387.00 rupees per share (May-22)
LY Profits - Rs. 76 crores
This corresponds to -
NCAV - 84.5 rupees per share
Div Yield - 3.22%
Investments in the company are Rs. 232.2 crs. Of this, 147 crs are in mutual funds. This (147 crs) corresponds to an additional margin of safety of Rs. 71 rupees per share. Hence the NCAV (w/ invt) equals 155 rupees per share. CMP : NCAV ratio is just 2.48 (good comfort)
I expect current sales at Rs. 110 crores for the company i.e. a trailing EPS of 53 rupees per share or, a P/E of 7.3. This is brilliant as compared to it's peers aka Bharat Forge, Ahmednagar Forging, IID Forging etc. (Bharat Forge is at a PER of 32)
The sales of the company have been on the rise - 677 crs (2004), 897 crs (2005), 971 crs (2006), 1140 crs (FY2007). Profits have remained uniform over the last 4 years. FY2007 has however been different with a 35% net gain over last year profits. As long as profits remain at the same levels, I am up for investing.
Electrosteel Castings is a Rs. 600+ share (in 12-18 months), as long as they are no strange downsides in margins. (satirically, the margins have been coming down but increased sales activity is ensuring constant generation of profits). It is however a mystery why the stock has been between the 380 and 395 mark for the last 3 months, when so much activity is happening around the sensex. I did double-check for possible downturns ... looked at reports of Ahmednagar Forging and Bharat Forge - there weren't any industry risks in sight. A good buy !
Tuesday, May 22, 2007
Electrosteel Castings
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2 comments:
Hi Shankar,
I am also interested in this company and have already invested in it. What I like is the consistant Div payouts and hence the yield is very high. Actually for FY06 the yield should be around 6-6.5%
I was just curious to know if you considered the FCCB issue dilution on equity base, because if you did the EPS should come down by almost 25-30% and that makes it a PE of around 10-11. This is one reason why the stock is not performing as well as the market. ROCEs and Net margins also have been coming down consistantly since last 5-6 years. I expect them to go up as the company has preety much completed its backward integration and have started concentrating on exports which should be a high margin business I suppose.
hth,
Harshit
oops, a typo.. I meant FY07 when I was talking about the div yield of 6%
:-)
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