El Forge Ltd - 58.00 Rs
Incorporated in 1934, El Forge Ltd (EFL) is one of the leading forging manufacturers in south India with over 40 years of experience in metal forming. It manufactures and markets carbon, alloy and stainless steel forged components for the automotive and process industries. The product range includes press forgings, upset forgings, drop forging etc which are mainly used to manufacture engine parts, transmission parts, steering and suspension parts, break assembly parts, chassis parts, drive line and electrical parts. It supplies both - forging and machining components to OEMs like Ashok Leyland, MICO, Bosch, Rane TRW, Sundaram Clayton, Lucas TVS, & Toyota. Besides, more than 25% of production is exported to countries like USA, UK, Germany etc.
EFL has four manufacturing facilities, one each at Chromepet, Gummudipundi and Thurapakkam in Chennai and one at Hosur in Tamil Nadu with total installed capacity as 18,200 MTPA. In order to become a leading global forging supplier, company is setting up a world class manufacturing facility at Appur Village, Sriperambadur near Chennai. Till now company has already invested 40 cr for this expansion and the plant is expected to start commercial production shortly. With this its manufacturing capacity will get enhanced to 23,200 MTPA. Meanwhile, EFL intends to move up the value chain by shifting its focus to machined components, which offers relatively higher margins than forged products. The company estimates to raise the share of machined components to 50% of its revenues in the next three to four years from the current 20%. To achieve this, company has set up a machine shop facility at Chromepet, especially for MICO with whom it has 30 years of relationship and derives 20% of its total revenue from it. On the other hand, company is approaching consumers of forgings in UK and Germany through its UK subsidiary company namely Shakespeare Forgings and has also been visited and audited by these European Companies. Hence its export business is expected to get a huge fillip in coming years.
On a consolidated basis EFL recorded sales of 141 cr and PAT of 7.85 cr which translates into EPS of 9 Rs on current equity of 8.50 cr. Company declared 14% dividend against 12.50% last year and the scrip is still trading cum-dividend. Last year, to fund its expansion plan, ELF raised around 15 cr thru private placement of 12.15 lakh equity shares @ 120 Rs per share. It also issued 3 lakh share warrants to promoters to be converted @ 132 Rs per share. To conclude, with revenues kicking in from new plant and higher export shipment, company is expected to end FY08 with sales of 185 cr and PAT of 10.50 cr on consolidated basis. This works out an EPS of 12 Rs on fully diluted equity of 8.80 cr. Despite such strong fundamentals, scrip is hitting new 52 week lows. Hence investors are strongly recommended to buy at current levels with an expectation of 50% return in 12 months.
EFL has four manufacturing facilities, one each at Chromepet, Gummudipundi and Thurapakkam in Chennai and one at Hosur in Tamil Nadu with total installed capacity as 18,200 MTPA. In order to become a leading global forging supplier, company is setting up a world class manufacturing facility at Appur Village, Sriperambadur near Chennai. Till now company has already invested 40 cr for this expansion and the plant is expected to start commercial production shortly. With this its manufacturing capacity will get enhanced to 23,200 MTPA. Meanwhile, EFL intends to move up the value chain by shifting its focus to machined components, which offers relatively higher margins than forged products. The company estimates to raise the share of machined components to 50% of its revenues in the next three to four years from the current 20%. To achieve this, company has set up a machine shop facility at Chromepet, especially for MICO with whom it has 30 years of relationship and derives 20% of its total revenue from it. On the other hand, company is approaching consumers of forgings in UK and Germany through its UK subsidiary company namely Shakespeare Forgings and has also been visited and audited by these European Companies. Hence its export business is expected to get a huge fillip in coming years.
On a consolidated basis EFL recorded sales of 141 cr and PAT of 7.85 cr which translates into EPS of 9 Rs on current equity of 8.50 cr. Company declared 14% dividend against 12.50% last year and the scrip is still trading cum-dividend. Last year, to fund its expansion plan, ELF raised around 15 cr thru private placement of 12.15 lakh equity shares @ 120 Rs per share. It also issued 3 lakh share warrants to promoters to be converted @ 132 Rs per share. To conclude, with revenues kicking in from new plant and higher export shipment, company is expected to end FY08 with sales of 185 cr and PAT of 10.50 cr on consolidated basis. This works out an EPS of 12 Rs on fully diluted equity of 8.80 cr. Despite such strong fundamentals, scrip is hitting new 52 week lows. Hence investors are strongly recommended to buy at current levels with an expectation of 50% return in 12 months.
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