Pix transmissions - low profile microcap company


(Rajeev Jawahar) #21

Pix Transmissions came out with a great set of Q4 numbers. As I am not sure about the sustainability of Q4 margins, I am taking the profitability margins for the entire year 17-18 to average it out. The Company seems to have completed its current phase of expansion & is possibly reaping its benefits. The high operating margins have sustained / improved & this has led to a disproportionate growth in profitability with even marginal growth in Sales, as mentioned in my post September 24, 2017.

The expansion has been completed at an opportune time. The effects of GST implementation / demonetization have clearly been absorbed by the system & the economy seems to be returning to its earlier growth trajectory as the recent GDP numbers seem to indicate. This pick up should logically result in decent sales growth in the current year & with its high operating margins, we could see another disproportionate year of growth in profitability. A 15% top line growth in 18-19, could result in an EPS of about Rs. 20 for the year.

Despite its high margins, the stock is still available at about 10% higher than its book value of about Rs. 138 as on March 31, 2018

There could additionally be another pleasant surprise in store. These numbers pertain to the stand alone Co. It also has a couple of subsidiaries abroad. These subsidiaries are marketing Co.’s & their profitability has not yet been factored in.