Micro Forge (India) Ltd - 31.00 Rs

Belonging to New Tech group, Micro Forge (India) Ltd was originally incorporated as private ltd company in 1989 and was subsequently converted to public ltd in 1993. It is primarily engaged in manufacturing of forging and machined components for automobile industry. Its product profile can be broadly segmented into flanges & automobile parts. It produces a wide range of forged & machined flanges made from carbon steel material confirming to ASTM, DIN, JIS, GOST, etc. It also forges alloy steel, stainless steel, carbon steel etc in partially or fully machined like connecting rods, crankshafts, camshafts, crown wheels, bull gears and various other auto part ranging from 0.5kg to 40 kg single piece weight. MFL is well known for its ability to develop & manufacture customized automotive spare on the basis of buyers technical drawings.

MFL’s manufacturing facility is spread over 6 acres of land with built-up are of 6773 sq. mtrs at Rajkot-Gondal National highway conveniently accessible by four track road from Rajkot city in Gujarat. The plant is equipped with the most modern forge shop and machining facilities alongwith latest testing equipments; all under one roof. Presently company has an installed capacity of 14,000 MTPA. Besides catering to domestic OEM’s, its products are also exported to U.S.A. and various other European countries. Infact, company has been conferred with export house status from the ministry of commerce. Its stringent quality control measure and full proof system got it accredited with ISO-9001 certification and registration of CRN of its product with 'MICRO' brand name. The domestic automobile industry is growing rapidly and outsourcing of auto components by the MNC’s is expected to see a substantial jump in coming years due to cost and various other factors. This all augurs well for the company.

Earlier, due to some non compliance, trading in equity shares of the company was suspended. It was only from 3rd May 2007, it was revocated with the base price as 23.00 Rs. Since then it shot up substantially to make a high of 52/- Rs in early June and has now settled down to 30/- Rs. Financially company has made a strong turnaround in FY07. Sales grew by 40% to 79 cr but PAT increased by 10x times to 3.10 against 0.30 cr in FY06. Importantly, its OPM improved substantially to 8% as compared to 3% in last fiscal. Meanwhile for the June qtr also its registered 8.50% of operating margin. Accordingly for FY08, it may clock a turnover of 85 cr and profit of 3.50 cr i.e. EPS of 6 Rs on equity of 5.60 cr. Although company margins are quite low compare to its peers, but it has the potential to improve it going forward. At the same time higher steel price is cause of concern. Despite all odds, scrip is trading reasonably cheap at current market cap of 17 cr and can once again test its high in medium term.