Mazda Ltd - Rs 25.00
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 automotive, electrical equipment, heavy engineering, agricultural, 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. Of late, company has diversified into business of manufacturing and exporting soft drink drink concentrates, essence, jams etc in a small scale to various countries including gulf countries where there is tremendous demands for such products.
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'. Of late, 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. Domestically, despite industrial slowdown & lower GDP growth estimates, Mazda is slated to maintain its momentum with increased orders from major clients such as Reliance Industries, L&T, Siemens etc. Due to increased business and unavailability of space in its two existing units, Mazda is setting up third manufacturing unit in Naroda, Ahmedabad with an investment of nearly Rs 5. However the unit hasn’t commenced operation due to pending formalities like local authority clearance certificate etc.
Meanwhile, company is doing well as it reported 15% rise in sales to Rs 60 cr and 30% jump in net profit to Rs 6 cr for FY09. Even for the current year till date, its topline has increased by 30% to Rs 56 cr and bottomline has grown by 35% to Rs 6.50 cr thereby posting an EPS of more than Rs 15 till date. Thus company has already surpassed the entire FY08 net profit in its first three quarters only. Besides, fundamentally Mazda is on a strong footing with very low debt equity ratio and good reserves leading to a book value of Rs 61. It boasts of having an uninterrupted track record of dividend payments for nearly two decades which certifies that company has done well even during earlier down cycle and slowdown. In the last five years company’s sales has grown at CAGR of 30% whereas Net profit has recorded a CAGR of 40%. On a conservative basis, for FY09 it is slated to clock a turnover of Rs 70 cr and profit of Rs 7.50 cr. This works out to an EPS of Rs 18 on current equity of Rs 4.25 cr. At an Enterprise value of merely Rs 16 cr scrip and at a P/E multiple of less than 1.5x times, company is available for a song. Long term investors are strongly recommended to buy at current levels with a price target of Rs 75 in 15~18 months.
No comments:
Post a Comment