`Buy` Wheels India; target Rs 345: Firstcall

Source: IRIS Exclusive (30-JAN-12)

Firstcall Research has recommended `Buy` on Wheels India with a price target of Rs 345 as against the current market price (CMP) of Rs 305 in its report dated Jan. 28, 2012. The broking house gave the following rationale:


>Wheels India engages in the manufacture and sale of automotive components in India and internationally.

>The Company has entered into a Technical Agreement with Topy Industries, a leading Japanese steel wheel manufacturer towards process, design and development of steel passenger car wheels.

>The company supplies 2/3rd of the domestic market requirement and exports 18% of the turnover to North America, Europe, Asia Pacific and South Africa.

>Net Sales and PAT of the company are expected to grow at a CAGR of 22% and 65% over 2010 to 2013E respectively.

>During the quarter, the company has reported Net Profit increased to Rs.109.80 million from  Rs.51.40 million in previous year same quarter.

>Wheels India disclosed results for the quarter ended September 2011. Net sales for the quarter moved up 19% to Rs.5041.90 million as compared to Rs.4238.80 million during the corresponding quarter last year. During the quarter, the company has reported Net Profit increased to Rs.109.80 million from  Rs.51.40 million in previous year same quarter. The Basic EPS of the company stood at Rs.11.12 for the quarter ended September 2011.

Valuation:

We expect that the company will keep its growth story in the coming quarters also. We recommend `Buy` in this particular scrip with a target price of Rs.345 for medium to long term investment.

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Auto ancillaries: Expensive but select stocks hold potential

6 Jan, 2012, 0926 hrs IST, Crystal Barretto, ET Bureau


Auto ancillary stocks, as measured by the ET Auto Ancillary Index, lost 17% of their value in 2011. This is in comparison to a 24% fall in the Sensex. The index currently trades at price to earnings ratio of 18 times, which is expensive compared to the Sensex, which trades at 16 times. But there are a handful of stocks from the sector which are undervalued.

The auto ancillary industry reported a sales growth of 15.5% in the September 2011 quarter, but profit declined 12.5% year-on-year, and is likely to register a similar performance in the December 2011 quarter. Yet, there are a handful of companies which are likely to outperform and are currently cheap.

So far, Jamna Auto has already reported 57% and 63% of its March 2011 full-year sales and profit, indicating that the company is in a position to sustain its annual growth in sales of 30% and 55% in profits by the end of the year. The stock fell 40% in 2011 and currently trades at Rs 87, which is eight times its trailing 12 months earnings per share.

Fag Bearings India, which trades at 11.3 times its earnings and Sundram Fasteners, which trades at 9.9 times its earnings also appear cheap. But whereas Sundram Fasteners lost 22% through 2011, Fag Bearings gained 19.4%. Sales and profits of Fag Bearings have been growing at an average of over 25% and 45% over the past four quarters.

In the first six months of the current fiscal, the company has already completed 62% and 74% of its last years sales and profit, and is therefore, in a firm position to sustain its growth rate.

Other auto ancillaries which posted positive annual returns were Amtek India, Bosch, Federal-Mogul Goetze, SKF India and WABCO India.

SKF India and WABCO India trade at 15.3 times and 15.9 times their earnings and are fairly valued, whereas Bosch and Federal-Mogul Goetze are expensive at 22 times and 30 times, despite firm expectations of earnings growth.

Amtek India's sales have been growing at about 45% over the past four quarters while its profits have been doubling. Despite the 180% rise in its share price through 2011, its valuation is still not very high. At Rs 97, the stock is available at 19.3 times its earnings.

(Source : http://m.economictimes.com/PDAET/articleshow/11383304.cms)

Steel Strips Wheels commences exports of steel wheels to Audi

NEW DELHI: Automobile component manufacturer 'Steel Strips Wheels Limited' (SSWL) Friday said it had started exports of steel wheels to German carmaker Audi from Dec 30 from its Chennai factory.

"The company has begun exports to Audi on Dec 30, 2011 from its Chennai factory. The said business was awarded by Audi to the company in July 2010," 'Steel Strips Wheels' said in a regulatory filing.

"The awarded business has a potential of exports worth over $38 million (Rs.2,026 million) over a 5 year period," it added.

At the Bombay Stock Exchange, the shares of the company were up by 5.21 percent to trade at Rs.185.85.

Steel Strips Wheels manufactures automotive steel wheels for passenger cars, multi-utility vehicles, tractors, trucks, OTR vehicles, and two- and three-wheelers.

(Source : http://economictimes.indiatimes.com/news/news-by-industry/auto/auto-components/steel-strips-wheels-commences-exports-of-steel-wheels-to-audi/articleshow/11305065.cms)