GS AUTO INTERNATIONAL LIMITED
| STRONG BUY:SOLID INVESTMENT PICK | BSE Code: 513059; GSAUTO |
Face Value: Rs 5; CMP: Rs 27; Market Cap: Rs 36 Crore; Book Value – Rs 33 / share ; Gross assets – Rs 71 Crore
One month Target – Rs 35; Medium term Target – Rs 49
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Company Highlights
1. GS Auto International Limited (GS Auto) was set up in 1938 and is one of the leading manufacturers of Automotive Suspension and Fastening Components for Indian and International Utility Vehicles, Commercial Vehicles, Multi-Axle vehicles, Trailers and Special Purpose Vehicles.
2. The company's manufacturing facilities are located in Ludhiana and Jamshedpur and are ISO QS and TS 16949 certified.
3. GS Auto has strong presence in OEM segment, Replacement market and Export market.
a. As an OEM vendor it supplies material to all leading companies such as Tata Motors Limited, Hindustan Motors Limited, Mahindra & Mahindra, Ashok Leyland, etc. OEM sales constitute around 26% of total sales.
b. It has network of 500 dealers spread across the country to cater to Replacement market. This segment constitutes around 66% of total sales
c. Export market constitutes around 8% of total sales.
4. The last couple of years were tough for the auto component industry due to sluggish economy and stagnant demand. This coupled with expansion in Jamshedpur had put severe financial burden on the company and it went into losses in FY13 and FY14.
5. Presently the economy is on revival mode and first round of expansion in Jamshedpur is completed. Overall Cost of Production will be lower at Jamshedpur, due to totally automated state of the art technology plant, lower power cost, and overall reduction in the transportation cost. Due to this company is expected to do very well in near future. It is expected that Company will break even in financial performance in the present quarter and expected to do very well in further quarters.
6. The Company is increasing its capacity in Ferrous casting business (a high margin business) progressively which will further improve the margins. The Jamshedpur plant only caters to Ferrous Casting business capacity.
7. Recently GS Auto amalgamated one of its group company with itself, which will ease out liquidity position of the Company, due to money blocked in VAT refund from State Government to the extent of Rs. 5.50 Crore.
8. To leverage the pan India distribution network, GS auto proposes to launch its exclusive stores by name of 'GS Shoppe' wherein it would sell entire range of auto components (either manufactured at its units or outsourced) to retail clients. This will significantly increase the margins of the company and would also further reduce its dependence on OEM clients.
Valuation: GS Auto is trading at P/B value of 0.75. The other players in this segment are trading at north of P/B of 1.5. We expect the company to trade atleast at P/B multiple of 1.5, which gives the price target of Rs. 49 per share.
Financials:
| Particulars | FY2011 | FY2012 | FY2013 | FY2014 |
| Sales (Rs Crore) | 120 | 131 | 127 | 130 |
| EBITDA (Rs Crore) | 9.1 | 10.5 | 2.8 | 7.3 |
| PAT (Rs Crore) | 4.53 | 4.61 | (1.26) | (0.18) |
Now, Company is going to announce mindblowing & turnaround results…Looking into growth of AUTO sector & companies like TATA motors,M&M,Ashok Leyland's growth for which GS Auto is a big supplier…..GS Auto is going to have big blasted benefits in current year….
This is A solid investment pick for each & every investors which can give solid profit and returns in coming days to those who has holding capacity……
Don't wait… just buy it immediately……n wait for healthy and safe returns…Buy before every 2nd person is running behind this for buying…..
Paras K.Ghelani(PG),
Shreeji Investment Hub,
Equity & Commodity Research Analyst,
Equity & Commodity Broker,
Jamnagar.Gujarat.
Mobile No.: 090990 10827.
Disclaimer : The Fundamental,Technical and/or Astrological analysis provided in this newsletter/buy report is for the purpose of education and guidance of investors and traders. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. Any information, analysis, recommendations, opinions and suggestions are given with the understanding that readers acting on this information assume all kind of risks involved in trading and investment. Under no circumstances, Analyst /Author/ Astrologer will be liable for any loss, profit, special or consequential damages that result from the use of the contents in this newsletter. Trading in stocks is a high risk activity which can wipe off more than your entire capital. Trade at your own risk only with adequate research and judgment.
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