Akar Auto Industries Ltd
(BSE Code: 530621) (CMP: Rs.50.50) (FV: Rs.5)
Incorporated in 1989, Aurangabad-based Akar Auto Industries Ltd (AAIL) manufactures and sells hand tools, auto leaf springs, parabolic springs and commercial automotive forgings. It offers spanners such as open-ended jaw, ring and combination spanners; carpenter/striking tools including pincers and tin cutters, striking tools, planes and T-bar cramps and saws; and leather tool aprons. It also provides automotive/construction tools comprising vices, chisels, clamps, hacksaws, lubricating tools, tubular box spanners, bearing pullers and punches; wrecking bars and nail pullers; pipes, wheels and filter wrenches; packaging products; electrical tools such as pliers, screw drivers; and electronic and surgical tools. It exports to Europe, USA, Japan, Australia and other countries worldwide. Its marquee clients include Ashok Leyland, Bajaj Auto, BHEL, Force Motors, Tata Motors, Mahindra & Mahindra, Kirloskar, Piaggio, Greaves, etc. With an equity capital of Rs.5.39 crore and reserves of Rs.22.6 crore, AAIL’s share book value works out to Rs.25.94 and its P/BV is reasonable at 1.95x. The promoters hold 73.06% of the equity capital, which leaves 26.94% stake with the investing public.
For FY18, AAIL reported 30% higher PAT of Rs.3.2 crore on 27% higher sales of Rs.241.45 crore and an EPS of Rs.2.97. During Q1FY19, it reported 77% higher PAT of Rs.1.06 crore on 49% higher sales of Rs.68.09 core and an EPS of Re.0.98. It declared
11% dividend for FY18. PAT has grown at 36% CAGR over the last
Currently, the stock trades at a P/E of 14.90x and is available at
42% discount to its 52-week high of Rs.86.5 recorded in December 2017. Based on its financial parameters, the stock looks attractive at the current level. Investors can buy this stock with a stop loss of Rs.40. On the upper side, it could zoom to Rs.75-80 in the medium-to-long term.