Sml Isuzu Limited


(Mitul Patel) #1

SML Isuzu Limited (SMLI) is a trusted and reliable commercial vehicle manufacturer since 1985. It has over 25 Years of experience in producing Light & Medium commercial vehicles to meet the Indian customer needs. SMLI is a first company to manufacture and supply state of the art fully built Buses, Ambulances and customized vehicles.
Sumitomo Corporation, Japan and Isuzu Motors, Japan respectively holds 44% and 15% shareholding in the Company.
This is very good CV cycle story with added benefit newer Vehicle launch.

Recent Observation:

 Company is highly ignored as we have better results coming from other players.
 They have faced recent profit growth issue's due to Bharat Stage norms & supply issue.
 Newer model & marketing related expense.

Pros for Trigger:

Good vehicle inventory
Expanse of delivery network is going on nicely
Good price points entries & they can complete properly in SUV & HV segment.
Industrial activity demand improvement will be visible.
Good ROE 
Good Capital allocation
Good Dividend History
Share holder friendly Management 
Vehicle scraping policy will be big boost.

Cons to Consider

Competition from large player
Raw material Spike 
Demand for Vehicle can dampen, but highly unlikely 
Pick up in CV cycle is not happening at desired pace, keep watch on it.
profit was depressed as sales was depressed due to GST, Demoney & Bharat Stage norms, So once we start seeing  good result it will be in Investment radar

Financials:

image

As on 19-Dec-2019 :
Return on capital employed: 21.92%
Return on equity: 16.95%
ROCE3yr avg: 18.71%
Reserves: ₹ 388.04 Cr.
Debt: ₹ 38.64 Cr.
Book value: ₹ 280.52
Net worth: ₹ 402.52 Cr.
Operating cash flow 3years: ₹ 175.02 Cr.
Cash Conversion Cycle: 44.18
Average return on equity 3Years: 15.65%
Market Cap to Sales: 1.1

Wide Range of Products Both in Cargo (5 – 12 ton) and Passenger Categories (13 - 52 seats)

Installed Capacity
18000 Vehicles
4000 Bus Bodies

Disc : Little bit of investment done .
I would be monitoring vehicle sales & if we see it moving north side then keep adding.


(Manish Vachhani) #2

(Manish Vachhani) #3

(Rohit) #4

Though the company is in business for more than 30 years , still market cap is just 1200 crores around. Looks v low when we compare with other companies like Mahindra , TATA etc. Is their any specific reason it did not grown much. I have seem a few SML Isuzu vehicles in Bangalore which were used as Cabs for IT employees.
But not many people know about this company. Do they have any plans to introduce new products or increase in market share etc ?


(AmitContrarian) #5

Any strategy on Electric Vehicle side ?


(anand21) #6

Their new products vmax dmax are good when compared to peers technically but are high priced and inexperienced sales staff also doesn’t help. They have to improve on sales, marketing.


(Mitul Patel) #7

Not that i have seen news on it.
But this is CV & SUV manufacturer so Electric will be little distant away.


(Mitul Patel) #8

Yes i think they are costly, but its good for company if they are able to do improve sales with better pricing.
As i have said most important kicker for this story is that If GDP picks up then CV cycle should pick up which is dormant for 4-5 year.
If SML manages to pick up sales with improving margin than we can increase holding in it.
Monthly Sales figure is must to track this one.


(Mitul Patel) #9

Sales is not picking it up yet


(AmitContrarian) #10

Technically looks like it getting good support here -


(Sujay Ghosh) #11

Some information:

I was very much excited about this company because of its history of Japanese parents: Mazda and Isuzu. [I am not sure if it still has some technical collaboration with Mazda].

On my last trip to Darjeeling in Mar 2017, I saw mostly SML Trucks for the hilly road contractions. The second best in number was Eicher trucks. I was told that Tata trucks, which are plentiful in plains aren’t as efficient in hilly areas.

Regarding EV side, I can see that Isuzu motors have the requisite technology for that.
https://isuzu.com.au/news-media/isuzu-electric-vehicles/
They also has low-pollution vehicles.
www.isuzu.co.jp/world/technology/low/index.html

Annual Report 2017-18
http://smlisuzu.com/Upload/AReports/9f60f405_AR2018.pdf