Dear Readers,
Nelcast was recommended at 71 Rs in July and before two days (27/11/2017) it touched 107 Rs and giving 50% Return within 4 months..
Today closed 98 Rs.
Superb Return
Happy Investing!!
Keep visiting website
Regards,
Kamlesh
================================
Equity Research Report- Castings & Forgings
Recommendation: Buy
Nelcast was recommended at 71 Rs in July and before two days (27/11/2017) it touched 107 Rs and giving 50% Return within 4 months..
Today closed 98 Rs.
Superb Return
Happy Investing!!
Keep visiting website
Regards,
Kamlesh
================================
Equity Research Report- Castings & Forgings
Recommendation: Buy
Hold
for 3 years
Target:
150 Rs.
Date: 15/07/2017
NELCAST LIMITED
By Kamlesh Bavrva
CMP - 71
Company Name: Nelcast Limited
BSE
Code: 532864
NSE
Code: NELCAST
Market
Capital: 623 Cr.
Face
Value: 2
52 Week
Low / High: 76/44
Book
Value: 38
Price/Book
Value: 1.89
Dividend (%): 45%
Promoter Share pledge: Nil
Company Overview:
v
Established in 1985.
v
Nelcast is having two plants in India at Gudur (A.P) and Ponneri (Tamil
Nadu).
Plant-I Gudur
Location: Andhra
Pradesh
Specializes in the
manufacture of casting and machining made of ductile iron
Specialization:
Ductile Iron Parts
Functions:
Manufacture of casting and machining
Capacity: 90000 MT
per annum.
Plant-II Ponneri
Location: Tamil
Nadu
Specializes in the
manufacture of casting and machining however specializing in Grey Iron and
ductile parts
Specialization: Grey
Iron Parts and Ductile Iron Parts
Functions:
Manufacture of casting and machining
Capacity: 60000 MT
per annum.
Total Capacity: 1,50,000
MT of Ductile and Grey Iron.
v
Nelcast is the largest ductile iron producer in India.
v
Today, Nelcast is one of India's largest suppliers of the finest ductile
iron and grey iron castings ranging from 0.5 Kg to 260 Kg in weight.
v
Nelcast manufactures parts are used in various applications in
§
Automobiles such as the engine, transmission, suspension, axle, brake
and steering.
§
Tractor industry for their requirement of various housings as well as
engine, transmission and axle components.
§
Railways & the pipe fittings industries.
v
Nelcast is a ferrous casting industry, producing superior quality
castings for many an industry.
v
Nelcast has got ISO 9002, QS 9000, and TS 16949 certification.
v
Nelcast has also been awarded with the ISO 14001 & ISO 18001
certifications in 2010 in recognition of its commitment to the Environment as
well as Health & Safety.
Manufacturing: Foundry
v
Nelcast is having foundry with manufacturing units located in Gudur, AP
and Ponneri, TN, both in South India with
Ø
Moulding Shop
Ø
Melting Shop
Ø
Core Shop
Ø
Quality Control’
Ø
Machine Shop
Machining Division:
Horizontal
Machining Center
Vertical
Machining Center
Carl
Zeiss CMM
Zoller CNC
MCV400S
VMC
LT20C
Turning Centre
Products:
1.Automobile
Wheel Hubs
Brake
Drums
Differential Carriers & Axle
Housing
Slide Support
Shackles
Brackets
2.Trailers
Foot Mounting & Torque Rod
3. Engines
Cylinder Blocks
Heads
Fly Wheels
Crank Shaft
Bearing Cap
Engine Support
Exhaust Manifolds
4. Tractors
Transmission Case
Centre Housing
Rear Axle Housing
Hydraulic Lift Cover
5. Railways
Inserts/Shoulders for Concrete Sleepers
6. Pipe Fittings
Ductile Iron Fittings - Size4"
& Above
7. Machining of cast iron driveline
components
Export:
Nelcast
is exporting his products to USA,AUSTRALIA,EUROPE Countries.
Customers:
Nelcast Ltd Shareholding Pattern:
Share holding Pattern
|
|
Description
|
Percent of Share (%)
|
Promoters
|
74.53
|
Public Share
|
25.47
|
Total
|
100
|
Focus on - Financial Results March 2017:
v
Nelcast Limited, has recorded standalone revenue from
operation Rs 146.7 crore for the fourth quarter, ending on March 31
2017 compare to previous year 144.4 crore ending on March 31 2016.
v
Nelcast Ltd, has recorded standalone profits up to Rs 8.5 crore for
the fourth quarter, ending on March 31 2017 compare to previous year 6.4 crore
ending on March 31 2016 up by 32%.
v
For the year 2017, ending on March 31, the standalone net profits
surged to Rs 34 crore from the Rs 31.8 crore registered
last year 2016 up by 7% on YOY basis.
Nelcast Limited (Rs. in Lakhs)
|
||||
Quarter Ended
|
Year Ended
|
|||
Particulars
|
31.03.2017
|
31.03.2016
|
31.03.2017
|
31.03.2016
|
Revenue
from Operations
|
14671.02
|
14447.0
|
63764.34
|
62460.48
|
Other
Income
|
nil
|
nil
|
nil
|
nil
|
Total
Revenue
|
14671.02
|
14447.0
|
63764.34
|
62460.48
|
Profit
from operation before other income, finance cost and exceptional items
|
993.42
|
909.56
|
5060.82
|
5106.6
|
Net
Profit
|
849.25
|
642.04
|
3398.39
|
3186.93
|
EPS
|
0.93
|
0.74
|
3.91
|
3.66
|
Nelcast Limited
|
|||||
Particulars
(Cr.)
|
Mar-16
|
Mar-15
|
Mar-14
|
Mar-13
|
Mar-12
|
Net
sale/Revenue
|
574.55
|
560.69
|
544.89
|
515.16
|
507.6
|
Other Income
|
4.55
|
2.09
|
1.73
|
2.43
|
1.91
|
Total Income
|
579.1
|
562.79
|
546.61
|
517.59
|
509.51
|
Total
Expenses
|
530.1
|
516.59
|
517.06
|
481.3
|
488.81
|
Interest
Expense
|
6.15
|
6.96
|
4.68
|
1.85
|
3.05
|
Depreciation
& Amortization
|
13.42
|
12.86
|
12.65
|
12.84
|
11.11
|
Total Tax
|
15.02
|
14.32
|
7.6
|
13.8
|
6.79
|
PBDIT
|
68.57
|
66
|
46.88
|
50.98
|
34.85
|
PBT
|
49
|
46.18
|
29.55
|
36.29
|
20.69
|
Net Profit
|
33.98
|
31.87
|
21.94
|
22.5
|
13.91
|
Operating
Profit
|
64.02
|
63.91
|
45.15
|
48.55
|
32.94
|
NPM Margin%
|
5.68
|
4.02
|
4.36
|
2.74
|
0.26
|
Debt to
equity Ratio
|
0.26
|
0.29
|
0.29
|
0.34
|
0.35
|
Current Ratio
|
1.4
|
1.46
|
1.69
|
1.54
|
1.43
|
EV/EBITDA
|
7.82
|
6.74
|
3.81
|
6.05
|
2.87
|
ROE
|
10.44
|
7.79
|
8.42
|
5.52
|
19.06
|
ROCE
|
9.1
|
6.48
|
6.57
|
4.38
|
17.21
|
Equity
|
17.4
|
17.4
|
17.4
|
17.4
|
17.4
|
EPS
|
3.66
|
2.52
|
2.59
|
1.6
|
5.32
|
Financial Chart:
Investment Rational:
1.Cash rich company with low debt to equity
ratio < 1.
2.Constant revenue growth of company with
moderate profit
3.Nelcast is the largest manufacture of ductile
and Grey cast iron company in India
4. Due to India economy growth, Automobile
industries will boost up and due to that Nelcast will be benefited in future
5.Indian government is focusing more on
agricultural so tractor demand will boost and due to that Nelcast will be
benefited in future.
6. As company raw material is west iron and
others metals so due to GST low rate (5%) on iron and steel industry, company
profit margin will be increased.
7. The company is exporting product to
USA,Australia and Europe countrie and export customers include Arvin Meritor,
ZF Lemfoder, Caterpillar, Dobbie DICO, etc
8. The company had installed the Kunkel Wagner
High Pressure Moulding Line at Ponneri in 2001 and Inductotherm Pouring Tundish with Visipour at Gudur in 2013 which will
boost the company production and quality and will be benfited in future.
9. Over the years, Nelcast has successfully
focused on updating technology, improving skills, increasing productivity and
augmenting infrastructure. These strengths have helped the Company gain a
distinct edge over competition.
10 Nelcast Ltd current P/E is running below
Industry P/E.
11. Peer company’s Stock price in same business
is running above 150 Rs. and Nelcast is available at only 71 Rs which is
reasonable due to low P/B – 1.89.
Recommendation: Stock
CMP is 71 Rs. and stock is trading at P/E 18 & TTM EPS 3.91, based on all above
investment points , stock may double within a 3 years’ time horizon.
Please note:
v Note: The articles are not
research reports but assimilation of information available on public domain and
it should not be treated as a research report.
Registration
status with SEBI: I am not registered with SEBI under the (Research Analyst)
regulations 2014 and as per clarifications provided by SEBI: “Any person who
makes recommendation or offers an opinion concerning securities or public
offers only through public media is not required to obtain registration as
research analyst under RA Regulations”
Disclosure:It is safe to assume that I
might have the discussed companies in my portfolio and hence my point of view
can be biased. Readers should consult registered consultants before making any
investments.
