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“ Small cap pick in engineering ”
Investment Rationale
International Combustion - IC is expected to show traction in the engineering division from this fiscal, which would be driven by bulk material handling comprising of conveyor belts, pocket and belt elevators, apron feeders and haulages. We expect vibrating screens, feeders, grinding and drying systems to gain market share.
Capacities are no longer a limiting factor from this fiscal for IC in its Gear Box and Motors division, with the company having witnessed an expansion in the same last fiscal at a cost of `70mn.
Commercial production of crushers with technology support from Advance Engineering of Brazil this fiscal would mark the entry of IC into crushing and screening projects.
Despite the present slowdown in the economy, IC registered robust growth in both top-line and bottom-line during Q2’FY12. Net profit witnessed an impressive growth of 50.4% yoy at `36mn, boosted by 24% yoy jump in net sales at `313mn.
Even as the industrial growth, during September 2011, slipped below 2%, IC secured its highest monthly contract during September.
IC has 3 production facilities at Aurangabad, Nagpur and Kolkata and its Baidyabati facility in Kolkata has spare land which, we believe, if monetised can fetch `100 per share.
Outlook & Valuation
We expect IC to post a 33% earnings growth during FY’12 and FY’13 backed by a 23% CAGR growth in revenues. IC is virtually a debt free company with cash and cash equivalent of `100 per share and BV of `315
A clean balance sheet and robust business model backed by technology partners, coupled with compelling valuation makes IC our preferred small cap pick in the engineering space. We recommend a BUY with an 18 month price target of `600. At the current market price, the stock is trading at a P/E of 5x FY’12E EPS of `55.2 and 3.7x FY’13E EPS of `74.2.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
“ Small cap pick in engineering ”
Investment Rationale
International Combustion - IC is expected to show traction in the engineering division from this fiscal, which would be driven by bulk material handling comprising of conveyor belts, pocket and belt elevators, apron feeders and haulages. We expect vibrating screens, feeders, grinding and drying systems to gain market share.
Capacities are no longer a limiting factor from this fiscal for IC in its Gear Box and Motors division, with the company having witnessed an expansion in the same last fiscal at a cost of `70mn.
Commercial production of crushers with technology support from Advance Engineering of Brazil this fiscal would mark the entry of IC into crushing and screening projects.
Despite the present slowdown in the economy, IC registered robust growth in both top-line and bottom-line during Q2’FY12. Net profit witnessed an impressive growth of 50.4% yoy at `36mn, boosted by 24% yoy jump in net sales at `313mn.
Even as the industrial growth, during September 2011, slipped below 2%, IC secured its highest monthly contract during September.
IC has 3 production facilities at Aurangabad, Nagpur and Kolkata and its Baidyabati facility in Kolkata has spare land which, we believe, if monetised can fetch `100 per share.
Outlook & Valuation
We expect IC to post a 33% earnings growth during FY’12 and FY’13 backed by a 23% CAGR growth in revenues. IC is virtually a debt free company with cash and cash equivalent of `100 per share and BV of `315
A clean balance sheet and robust business model backed by technology partners, coupled with compelling valuation makes IC our preferred small cap pick in the engineering space. We recommend a BUY with an 18 month price target of `600. At the current market price, the stock is trading at a P/E of 5x FY’12E EPS of `55.2 and 3.7x FY’13E EPS of `74.2.
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