Akar Auto In­dus­tries Ltd

(BSE Code: 530621) (CMP: Rs.50.50) (FV: Rs.5)

Money Times - - Techno Funda - By Nayan Pa­tel

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

4 years.

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.

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