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Atul Auto Limited

ATUL AUTO LTD

Cmp 97, market cap around 71 crores.

The company is a small player in the three wheeler space with manufacturing facilities at Rajkot and Haridwar.

The company aims to be a market leader in lightweight transport vehicle segment by ensuring low manufacturing cost, sustainable domestic and international competitiveness, highly profitable growth.

FINANCIALS


The company recently finished rights issue at a price of Rs 30 per share in the ratio of 1 share for every four shares held. Post the rights issue, the equity capital will be around 7.5 crores with 75 lac shares of Rs 10 each outstanding.

Company paid a dividend of Rs 4.5 per share in fy 11.

The credible thing the management has done over the years is increase in sales with reduction in debt which shows good financial management on the part of the management. Promoter holding is around 60% with no pledging.

LAST FEW YEARS RESULTS


YEAR

07

08

09

10

11

Q1 FY 12

Q1 FY11

SALES

121

80

117

120

202

67

42

EBIT

8.75

6.86

5.7

14.2

20

6

4.88

INT

1.95

2.81

2.8

3.16

1.74

0.2

0.55

PAT

3.15

1.27

0.46

4.54

9.43

3.29

2.1

LAST FEW QUARTERS RESULTS


QTR

MAR 10

JUN 10

SEP 10

DEC 10

MAR 11

JUN 11

SALES

51

42

53

56

70

67

PBIDT

4.26

4.88

6

5

4.16

6

INT

0.61

0.55

0.48

0.42

0.27

0.2

PAT

1.66

2.1

2.93

2.51

1.88

3.29

The company is focussing on extending its sales reach to more number of states in India. Exports also could be a good growth driver.

The management has indicated a growth of 40% in sales for fy 12 over fy 11.

VIEWS INVITED.

1 Like

Enclosed report from Sunidhi.

http://www.moneycontrol.com/news_html_files/news_attachment/2011/AtulAuto_Sunidhi_190911.pdf

Useful backgrounder/case study on Atul Auto

http://www.chitralekha.com/JewelsofIndia/English/FT%20Jayanti%20Chandra.pdf

May just get you interested in the story!

Hi Hitesh, thank you for introducing ALL here.

ALL’s performance in last FY was quite impressive.

With hero group and TVS entering this market, will Atul face extream competition? Did you check their margins compared to Bajaj and Piaggio? I think the most critical aspect is the vehicle’s running cost and the company’s distribution reach. Do they have superior technology which offers better mileage and lower maintanence without compromising too much on power?

What in your opinion will give an edge to Atul in this market?

Thank You again

Vinod

1 Like
I was trying to get a handle on the Sources of Growth for Atul Auto

FY2011

FY2010

Volumes

#s

#s

Atul Gem

11072

4524

Contrib%

57.08%

36.69%

Growth%

144.74%

Atul Shakti

8264

7805

Contrib%

42.60%

63.31%

Growth%

5.88%

Atul Smart

62

0

Contrib%

0.32%

0.00%

19398

12329

Volume Growth

57.34%

Sales

201.59

119.85

Sales Growth

68.20%

We need to understand a few things from the above data points:
a) Atul shakti had much higher sales than Atul Gem in 2010. In 2011 the picture got reversed. What are the dynamics that are making this happen
b) Almost all the growth has been triggered by Atul Gem in 2011
c) Volume growth accounted for 57% of Growth in sales while price rise would have accounted for some 8-9% if we take out Wind Power, etc.
d) As on 31st March 2011, dealer advances were 3.37 Cr vs 0.36 Cr in 2011. This is a huge development. It indicates strong product pull. No wonder Working Capital/Sales is amazingly down to 3.38% from 14.31% in 2010. With Increasing dealer network and if product demand remains strong this is an amazing characteristic in this business.
Pls help recheck the working capital data. Seems too good to be true!
-Donald

http://machinist.in/index.php?option=com_content&task=view&id=2103&Itemid=2

Think the growth trick is in the 35 Km/Litre Atul Gem, rear engine 3 wheeler.

Atul Shakti is the earlier front engine 3 wheeler technology. Lesser mileage?

-Donald

Recently en-route to ratnagiri, By road, saw a lot of new Tata Magic IRIS and Mahindra’s maximo Mini Van’s. These 2 companies are getting very aggressive in the rural markets.

More Details here:

http://www.mahindra.com/News/Press-Releases/1303899611

http://www.tatamotors.com/media/press-releases.php?id=667

Company closed the Haridwar Plant in FY09 due to low sales.

Due to huge demand in India, they would address the export market may be in FY13 or FY14.

ATUL AUTO LTD

I think most of the other companies vehicles are giving the same milage as Atul Gem.

One of the main reason is the price where Atul vehicle costs around 1.25L while the Ace brands costs around 3L. Watch the below video.

http://www.in.com/videos/watchvideo-atul-auto-plans-rs-30cr-capex-this-year-8260707.html Link: http://www.in.com/videos/watchvideo-atul-auto-plans-rs-30cr-capex-this-year-8260707.html

http://machinist.in/index.php?option=com_content&task=view&id=2103&Itemid=2 Link: http://machinist.in/index.php?option=com_content&task=view&id=2103&Itemid=2

http://www.bseindia.com/stockinfo/anncomp.aspx?scripcode=531795
Atul Auto Ltd extends the closing date of Right Issue

Atul Auto Ltd has informed BSE that the Company have reviewed the status of the Rights Issue [Issue of 14,62,880 equity shares of Rs. 10/- each for cash at a price of Rs.30/- each including a premium of Rs. 20/- per equity share Aggregating to an amount of Rs. 4.38,86,400/- to the equity Shareholders of Atul Auto Limited ("AAL" or "the Company" or "Issuer") on rights basis in the ratio of 1 equity shares for every 4 equity shares held on record date i.e. September 05, 2011. The Issue price is 3 times of the face value of the equity share] and decided to extend the closing date for Right Issue from September 29, 2011 to October 14, 2011.

The stock closed the day at Rs.91.50, up by Rs.0.95 or 1.05%. The stock hit an intraday high of Rs.93 and low of Rs.89.50.

The total traded quantity was 5419 compared to 2 week average of 3317.

Announcement by the company on bse

Atul Auto Ltd has informed BSE that the Company has recorded total Sales of 6794 Vehicles in the quarter of July -September 2011, as against 4814 Vehicles of July-September 2010 Quarter.

Based on this info, the company could report excellent numbers for sep qtr.

Hi Guys,

Given its prospects, Atul Auto looks a safe bet even in current markets:). I have been buying in small lots on every dip in the last few days.

Please see if you can develop enough conviction in the company and its prospects.Here’s the updated Atul Auto stock story for everyones benefit!

Please react to the stock story, find holes/risks not yet covered, and help dig up more information on the acceptability of the company’s products in new markets. It is no#2 in Gujarat & Rajasthan 3-wheeler markets.

Disc: I have a vested and increasing interest in Atul Auto. It makes an entry into my Short Term Portfolio initially for 6-9 months. If we develop more conviction and the company sustains its performance and promise, it may well migrate to the long term portfolio.

if i buy tomorrow . Should I eligible for right issue ?

No, the stock is already ex-rights.

Atul Auto seems to be revving up. Stock was up around 13% today and closed around 120.

Dear Hitesh,Donald,

Thanks for your knowledge sharing. I was going the the Atul auto info declared with SEBI. You can download from here http://www.sebi.gov.in/cms/sebi_data/attachdocs/1295950438225.pdf

Though valuations are cheap, I find a lot of group companies, for only a 3 wheeler player like Atul auto. These promoter group companies are involved distributing spare parts of even other competitors like m&m,maruti,Honda etc. SOme group companies are also into real estate business. Some other companies which are into vehicle financing and other financing and consistently showing losses Also I don’t understand why there are more than one finance company. Anyways all finance companies are in red. Though 3 wheeler business is not as high growth as 2 wheeler industry, atul auto seems cheaper. But only the related party transactions are bit confusing. I hope you might have gone through this already. What do you infer from these transactions. DO you feel these are just the norm ? Thanks.

Atul Auto cancels Ahmedabad expansion plans

Economic Times, 9 Nov '11

Rising land prices in and around Ahmedabad have forced three-wheeler manufacturer Atul Auto Limited to cancel its proposed Rs. 1.5 (US$ 30 million)expansion plan. The listed company will now look for a 100 acre plot elsewhere in the state or even outside it.

Another good quarter from Atul Auto on the back of Q1.

a) Sales are up 53%, PAT up 73%

b) Good improvement in Net Margins going up to 6.72% which is the best achieved by the company so far

c) Working Cap/Sales turns negative!! Check that out! Debtors at 11 days is impressive. Inventory days has also come down to 28 days. Dealer advances coming in is the kicker as the company expands the network. Company books orders only on 100% advance basis, Looks to me business is very brisk in the 3 wheeler segment, and the company is doing all things right, at the moment.

Disc: I remain invested in Atul Auto and am a buyer at every dip!

Many family run firms evolve this way - with several group companies run by extended promoter families. There is an interesting case study Link: http://www.chitralekha.com/JewelsofIndia/English/FT%20Jayanti%20Chandra.pdf on Atul Auto, which will give you some insights into the background and character of people involved in the business- especially Jayantibhai. Iwas positively surprised & comforted that the group is a much bigger entity ~1000 Crs!

Frankly, I did not try to read too much into these. The results coming in each quarter meanwhile are very convincing, as we try and understand the company better, and understand the reasons behind the good performances.

-Donald

http://www.sebi.gov.in/cms/sebi_data/attachdocs/1295950438225.pdf Link: http://www.sebi.gov.in/cms/sebi_data/attachdocs/1295950438225.pdf m&m,maruti,Honda

Donald could you please let me know how did u calculate the debtor and inventory days. here what i got from my excel sheet:

S.D: 8.47 Crs / Total income: 136.25 Crs = 0.062 * 100 = 6.21 Debtor turnover ratio.

If i am wrong please do correct,

Thanks in advance :).