Mazda Ltd - Rs 65.00
Established in 1977, Mazda Ltd (Mazda) erstwhile Mazda Controls Ltd was founded by Mr. Sorab R. Mody with a small unit to manufacture automated valve packages. Today, it’s among the few engineering companies in the world, manufacturing very specialized, high technology and critical equipments for various industries like power, refineries, fertilizers, chemicals, nuclear, sugar, paper, food, pharma etc. Broadly its product profile can be segmented into Vacuum system, Valve division, Air pollution control equipment, Crystallizers and Evaporators. Hence its product range includes various types of vacuum jet ejectors, turbine bypass valve, desuperheaters, condensers, pressure reducing stations, pneumatic actuators, steam jet thermo compressors, process control equipments, scrubbers etc. In India, its products are installed at plants of Reliance group, United Phosphorus, IOC, BHEL, Alstom, Cadila, Grasim, GSFC, HPCL, Siemens, Triveni Engineering, GHCL, NRC, L&T, Nuclear Power Corp etc. Besides engineering, it also has a Biotechnology division dealing in carbohydrates, rare sugars and miscellaneous bio-chemicals. Recently, company has diversified into business of manufacturing food and drink concentrates, essence, jams etc in a small scalae.
Mazda has two manufacturing facilities located at Ahmedabad, Gujarat. For vacuum systems and air pollution control equipment, it has a technical collaboration with market leaders Croll-Reynolds Inc. USA, who also holds 12% stake in the company. Accordingly, the designing and engineering is done jointly by them, whereas manufacturing of equipment is done by Mazda and marketing is done by Croll across the globe. Mazda also has the collaboration with Germany-based Kauer Engineering for manufacturing various types of valve. Importantly, Mazda has the coveted ASME 'U' stamp accreditation certificate from the American Society of Mechanical Engineers (ASME) which very few Indian engineering companies can boast off. Hence, company can fabricate pressure vessels and heat exchangers confirming to ASME standards and are authorized to stamp them as 'coded Vessels'. Offlate, Mazda has designed vacuum systems for applications like steel De-gassing & expects good growth in this line of business. In future company intends to increase its export substantially with having Siemens, Alfa Laval, APV Asia Pte, BASF, Petronnas, Bachtel, Colgate Palmolive, European Space Agency, IDE Technologies Ltd, Ministry of Oil & Gas Industry Turkmenistan etc as its international clients. It is also expecting some good order from German firm for supply of fabricated valves for gas pipeline in Europe.
Due to increased business and unavailability of space in its two existing units, Mazda is setting up third manufacturing unit with an investment of approximately Rs 5 to 6 cr and has finalised the acquisition of land at Naroda, Ahmedabad. It is well poised to harness the growth opportunities and is continuously upgrading its manufacturing facilities, technology, production processes and its marketing reach to maintain its growth in future. For FY07 it recorded 40% growth in sales as well as NP to 53 cr and 5 cr respectively. Hence, it reported an EPS of 12 Rs on small equity of 4.25 cr. For FY08 it is estimated to report sales of Rs 65 cr and profit of Rs 6.5 cr which means EPS of Rs 15. Therefore the scrip is trading at a P/E ratio of 4x times which is extremely low considering its expertise and future prospect. Investors are strongly recommended to buy as scrip can easily double within 12~15 months.
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