It’s a company established in 1984 and then converted to JV with with a Japanese entity. Which is group company of MHALE group Germany.
This company make electronic ignition systems for 2/3 wheelers and portable engines, integrated starter systems, sensors and ECU’s.
They have 4 plants in hosur, Pondicherry, kolhapur and Rewari.
Talking about the past, this company doesn’t have a impressive growth for last 10yrs (don’t know as if they were sleeping or what).
Sales growth for TTM/3/5/10 yrs is 3.2/8/8/10 %.
Profit growth is also dismal during these timeframes (less than 4%).
ROE is also 10% which reflect their past performance.
But other fundamentals are good like
ROCE - 30%
Quick ratio - 3.23
Current ratio - 1.7
ALTMANN z - 8.18
Promoter holding - 66.39%
Div yield - 1.5%
One important thing to notice is company has been giving more than 33% of profits as dividend for last 10yrs and more than 43% for last 3 yrs. And it’s debt free with reserves of 229 cr for a mcap of 669cr.
What caught my eye was the announcement made by the chairman in AGM on 27th August about new business from EGR controller for small diesel engine to meet BS IV norms. Recently govt has announced that BS III emission norms will be moved to BS IV in 2017.
Second announcement he made that they are developing Electronic fuel injection and integrated starter generator for 2 wheeler (big potential) and off road vehicle. They claimed these products as disruptive (need more info on this).
Since then the stock is in upward trajectory and crossed it’s life time high and then corrected a bit.
He also announced higher R&D spending for developing state of the art components.
He also mentioned that they have hired an industry expert to improve efficiency by improving shop floor quality and productivity levels which gets reflected in SEP 2016 results as the OPM improved from 10.47% to 11.89% YOY and they saw a profit growth of 25%.
He also mentioned abt wage settlement happened for 3 factories (1 left). Which is a good sign and gives certainity.
Technicals of the stocks are strong as it crossed it’s 13 yr high with higher volumes.
I am not sure of the Dec results due to Demonitization. Margin improvement can be a big trigger with revenue growth from new business. So overall it looks promising for me.
I tried to contact the CS but still no success.
Once I am able to, will update you guys soon.
P.S : -
Disclosure - invested.