Akar Auto In­dus­tries Ltd

Money Times - - Techno Funda -

(BSE Code: 530621) (CMP: Rs.43.80) (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.25.03 crore, AAIL’s share book value works out to Rs.26 and its P/BV is rea­son­able at 1.7x. The pro­mot­ers hold 73.06% of the eq­uity cap­i­tal, which leaves 26.94% stake with the in­vest­ing pub­lic. For Q2FY19, AAIL re­ported 44% higher PAT of Rs.1.41 crore on 33% higher sales of Rs.82.48 crore and an EPS of Rs.1.3. For H1FY19, it re­ported 55% higher PAT of Rs.2.46 crore on 40% higher sales of Rs.150.57 crore and an EPS of Rs.2.3. Its EPS has grown at 23% CAGR over the last five years! It paid 11% div­i­dend for FY18. Its PEG (P/E to growth) ra­tio is just 0.5x, which is very at­trac­tive.

Cur­rently, the stock trades at a P/E of 12x and is avail­able at around 47% dis­count to its 52-week high of Rs.82.8. The stock looks at­trac­tive at the cur­rent level based on its per­for­mance pa­ram­e­ters. In­vestors can buy this stock with a stop loss of Rs.33. On the up­per side, it could zoom to Rs.75-80 in the medium-to-long term.

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