Action Construction Equipment Ltd - Fundamentals and Technicals
Action Construction Equipment is engaged in the business of manufacturing and marketing of Hydraulic Mobile Cranes, Mobile Tower Cranes, Crawler Cranes, Truck mounted Cranes, Material Handling equipment like Forklifts, Road construction equipment like Backhoe loaders, Compactors, Motor graders and agriculture equipment like Tractors, Harvesters, Rotavators etc.
Let’s look at some facts and figure of the company:
Fundamentals:
> It is a small cap company with a market cap of just Rs. 1,910 Cr.
> The ROCE is at 21.9% and ROE is at 16.5% which is impressive considering the size of the company.
> Stock P/E is at 23.9 which makes the valuation very attractive as compared to sector P/E at 45.63.
> Increasing Market Share: Over the last 5 years, market share increased from 9.55% to 14.78%
> Higher Than Industry Net Income: Over the last 5 years, net income has grown at a yearly rate of 51.13%, vs industry avg of 43.32%
> Higher Than Industry Revenue Growth: Over the last 5 years, revenue has grown at a yearly rate of 13.68%, vs industry avg of 4.17%
> It is almost a debt free company, reducing its borrowings continuously on year on year basis, that's a very good sign from investment perspective.
> Topline and bottomline both very impressive.
> FIIs and DIIs both have increased their stake in the company very recently.
Technicals:
> Stock looking very good on chart, its making rounding bottom pattern, one of the very profitable chart pattern.
> Trading above 100 and 200 DMAs.
> Stock has not just recovered Covid fall immediately but also raised almost 4 times from there.
> It is clear from volume at the bottom that lot of accumulation is going on in the company and bull run is around the corner.
> With the easing lockdown restrictions in multiple states the economy is showing a sign to recovery and construction activities are going to start with a big bang.
Considering all the points mentioned above it is clear that this is a fundamentally very strong company with good technicals on chart.
Fresh Buy - At CMP i.e. 168.
Old Buy - HOLD
Target - 3 times at least
Let’s look at some facts and figure of the company:
Fundamentals:
> It is a small cap company with a market cap of just Rs. 1,910 Cr.
> The ROCE is at 21.9% and ROE is at 16.5% which is impressive considering the size of the company.
> Stock P/E is at 23.9 which makes the valuation very attractive as compared to sector P/E at 45.63.
> Increasing Market Share: Over the last 5 years, market share increased from 9.55% to 14.78%
> Higher Than Industry Net Income: Over the last 5 years, net income has grown at a yearly rate of 51.13%, vs industry avg of 43.32%
> Higher Than Industry Revenue Growth: Over the last 5 years, revenue has grown at a yearly rate of 13.68%, vs industry avg of 4.17%
> It is almost a debt free company, reducing its borrowings continuously on year on year basis, that's a very good sign from investment perspective.
> Topline and bottomline both very impressive.
> FIIs and DIIs both have increased their stake in the company very recently.
Technicals:
> Stock looking very good on chart, its making rounding bottom pattern, one of the very profitable chart pattern.
> Trading above 100 and 200 DMAs.
> Stock has not just recovered Covid fall immediately but also raised almost 4 times from there.
> It is clear from volume at the bottom that lot of accumulation is going on in the company and bull run is around the corner.
> With the easing lockdown restrictions in multiple states the economy is showing a sign to recovery and construction activities are going to start with a big bang.
Considering all the points mentioned above it is clear that this is a fundamentally very strong company with good technicals on chart.
Fresh Buy - At CMP i.e. 168.
Old Buy - HOLD
Target - 3 times at least