Samkrg Pistons & Rings - Bull Run in Auto Ancillary
Samkrg Pistons & Rings Ltd, set up in March 1985, is in the manufacture of Pistons, Piston pins and Piston-rings for the automotive markets. It has plants at Hyderabad and Srikakulam near Visakhapatnam. SAMKRG caters mainly to the two-wheeler segment (accounted for 95% of its revenue in FY20).
Exports: Exports were about 13% of net sales in FY 20. The Co. exports its automotive products to more than 15 customers from different countries. The Co. supplies its aftermarket products to more than 24 countries. It exports to countries like Russia, South Korea, Japan, Brazil, Colombia, etc.
Capex: The Co. had spent about Rs 20 crore during FY 19 towards upgrading the facilities to meet BS VI norms.
R&D: Total R&D expenditure - 0.25% as a % of Net Sales
Focus: The Co. is focusing exports to developed Countries like Europe, U.K, France, Germany, Spain, Brazil and Russia. It is planning to make exports reach 20% of the Turnover.
FUNDAMENTALS:
> It is a Small Cap company with a market cap of just Rs.231 Cr. Very small company, huge growth potential.
> The ROCE and ROE is at 15% and 11% respectively which is very good considering the size of the company. Positive.
> Book Value to Market Value ratio is 1.3 which means the company have overall stable fundamentals and not very costly. Positive.
> Stock P/E is at 13.3 which makes the valuation very attractive as compared to the industry P/E at 33. Positive.
> OPM of the company is very much stable if not growing, it is at 16% as per Mar 21 Balance Sheet and last 5 year average is 17%.
> Stable Topline and Bottomline, continuously increasing on QoQ basis. Rapidly increasing on QoQ basis after the Covid slowdown.
> Debts: The company have Debts of only Rs.4 Cr as per Mar 21 Balance Sheet which is nothing as compared to its Reserves. We can call this a debt free company which is wonderful.
> Reserves: It is Rs. 156 Cr as per Mar 21 Balance Sheet. Continuously increasing since last 10 years.
> Promoters holding is intact at 66.88% since last 10 years, like they trust their own business and staying invested. No change at all.
TECHNICALS:
> The stock has taken long 3.5 years to make a wonderful rounding bottom pattern after taking support at Rs .23 levels. It has given breakout recently with huge volume concentration. Rounding bottom pattern is the most profitable chart pattern in technical studies.
> On the chart stock is continuously in UPTREND since March 2020 Covid fall.
> Increasing Long Volume towers as indicated by blue arrows at the bottom indicates that lot of accumulation is going on in the stock continuously.
> Trading above 100 and 200 DMAs this talks about the strength in the bull run of this stock.
Company's massive client base includes all big names in the industry. Few of them are Kawasaki, Honda, Royal Enfield, Vespa, Bajaj, Mahindra, Atul Auto, LML, Kirloskar and TVS.
Company have strong financials and numbers are continuously increasing on YoY basis specially after the Covid slowdown. It has also increased its production capacity very recently, investing in R&D to add more products to its portfolio, aggressively focusing on increasing its export volume specially to developed countries. Now if we look at the market from broader perspective, Automobile industry is in good momentum specially all small and midcap Auto Ancillary business. The company have great client base. It certainly is a good buy.
Fresh Buy - AT CMP i.e. Rs.241
Old Buy – Hold
Target – Rs.420
Risk Management Tip: Never invest more than 5% of your capital in any single stock.
Your likes and comments motivate me to bring more profitable studies like this.
Happy Investing!
ShareMktSchool
Exports: Exports were about 13% of net sales in FY 20. The Co. exports its automotive products to more than 15 customers from different countries. The Co. supplies its aftermarket products to more than 24 countries. It exports to countries like Russia, South Korea, Japan, Brazil, Colombia, etc.
Capex: The Co. had spent about Rs 20 crore during FY 19 towards upgrading the facilities to meet BS VI norms.
R&D: Total R&D expenditure - 0.25% as a % of Net Sales
Focus: The Co. is focusing exports to developed Countries like Europe, U.K, France, Germany, Spain, Brazil and Russia. It is planning to make exports reach 20% of the Turnover.
FUNDAMENTALS:
> It is a Small Cap company with a market cap of just Rs.231 Cr. Very small company, huge growth potential.
> The ROCE and ROE is at 15% and 11% respectively which is very good considering the size of the company. Positive.
> Book Value to Market Value ratio is 1.3 which means the company have overall stable fundamentals and not very costly. Positive.
> Stock P/E is at 13.3 which makes the valuation very attractive as compared to the industry P/E at 33. Positive.
> OPM of the company is very much stable if not growing, it is at 16% as per Mar 21 Balance Sheet and last 5 year average is 17%.
> Stable Topline and Bottomline, continuously increasing on QoQ basis. Rapidly increasing on QoQ basis after the Covid slowdown.
> Debts: The company have Debts of only Rs.4 Cr as per Mar 21 Balance Sheet which is nothing as compared to its Reserves. We can call this a debt free company which is wonderful.
> Reserves: It is Rs. 156 Cr as per Mar 21 Balance Sheet. Continuously increasing since last 10 years.
> Promoters holding is intact at 66.88% since last 10 years, like they trust their own business and staying invested. No change at all.
TECHNICALS:
> The stock has taken long 3.5 years to make a wonderful rounding bottom pattern after taking support at Rs .23 levels. It has given breakout recently with huge volume concentration. Rounding bottom pattern is the most profitable chart pattern in technical studies.
> On the chart stock is continuously in UPTREND since March 2020 Covid fall.
> Increasing Long Volume towers as indicated by blue arrows at the bottom indicates that lot of accumulation is going on in the stock continuously.
> Trading above 100 and 200 DMAs this talks about the strength in the bull run of this stock.
Company's massive client base includes all big names in the industry. Few of them are Kawasaki, Honda, Royal Enfield, Vespa, Bajaj, Mahindra, Atul Auto, LML, Kirloskar and TVS.
Company have strong financials and numbers are continuously increasing on YoY basis specially after the Covid slowdown. It has also increased its production capacity very recently, investing in R&D to add more products to its portfolio, aggressively focusing on increasing its export volume specially to developed countries. Now if we look at the market from broader perspective, Automobile industry is in good momentum specially all small and midcap Auto Ancillary business. The company have great client base. It certainly is a good buy.
Fresh Buy - AT CMP i.e. Rs.241
Old Buy – Hold
Target – Rs.420
Risk Management Tip: Never invest more than 5% of your capital in any single stock.
Your likes and comments motivate me to bring more profitable studies like this.
Happy Investing!
ShareMktSchool
If already taken entry then HOLD.
If not yet taken entry avoid for sometime. Will update when to take fresh entry.
We have already taken entry and holding.