Munjal Auto – Multibagger Analysis

Munjal Auto Industries Ltd., (MAIL) is a TS 16949 and ISO 14001 accredited, leading auto component manufacturing company in India producing Exhaust systems complete for two wheelers and four wheelers, Spoke rims for two wheelers, Steel Wheel Rims for Two Wheelers and Four Wheelers, Fuel Tanks for Four wheelers, Seat Frames for four wheelers and other automotive assemblies. The company has a technical collaboration with Samsung Industries Ltd. of Korea for the manufacture of Fuel Tanks for Four Wheelers. The company holds the pride of being among the largest manufacturer of the exhaust systems in the world, manufacturing close to 22,000 systems per day. Besides the company produces more than 10,000 spoke rims for motorcycles and steel wheel rims every day.

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Company URL: http://www.munjalauto.com/

Screener URL: http://www.screener.in/company/?q=520059

CMP: 81

Warren Buffett Checklist

History of Consistently Increasing Sales, Earnings & Cash Flow Yes. image
Durable Competitive Advantage

Yes.

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Future Growth Drivers Yes for next 2 years. image
Conservative Debt (long term debt < 3 Net Profit) Yes. image
Debt Equity Ratio 0.34 image
Return on Equity must be Above Average 28% image
Low CAPEX required to maintain current operations Moderate. image
Management is holding / buying the stock Flat for 3 years at 75% image
Price is Under Valued (< intrinsic value) Yes image
Stock Price is consolidating (now) Price at yearly peak image
Stock Price is growing in past years along with EPS growth Yes.  image

Additional Futurecaps Checklist

Consolidated PE, PB Ratio PE 8 (good), PB 2 (good) image
Cash Flow Positive, Net Profit % greater than 8% Positive Cash Flow, But Net Profit around 5% only. image
Paying Dividends, Tax Yes image
EPS Growth Rate 20% (good)  image
Latest Quarter EPS Growth Flat. Be alert.  image
Expected Gain in 5 Years Considering moderate EPS growth of 15-20% the company should grow 8-10 times in 5 years.  image
Volume Analysis Moderate  image
Power of Brand Yes.  Part of Hero Group of companies.  image
Corporate Governance, Reputation of Leaders Yes.  image
Fraud reported Not in current search.  image

 Declaration

Considering the above qualities Munjal Auto is a stock with moderate multibagger properties.  I do expect good motor business for next 2 years before recession strikes. 

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Allocation

2-3% of your portfolio.

Disclaimer

Futurecaps recommends 20 to 25 multibaggers per year, we recommend a 25% to 50% allocation of your savings in equity.  The stocks recommended here are gone through Analysts of several years experience in stock market.  Although they were successful in predicting future multibaggers, the overall stock market is a risky game.  So we recommend the reader to put his/her own thoughts & invest wisely.

5 Responses to “Munjal Auto – Multibagger Analysis”

  1. Bhavin Mehta Says:

    I hold this stock for last 4 months. Its testing my patience.

    Inspite of great fundamentals , this is range bound stock between 70Rs to 85Rs.

    But your post confirms my choice hence I will hold it for long term.
    Thanks

  2. Varun Says:

    Great pick as usual. What is your opinion on Indian Toners & Developers. Seems like a good business in a decent growth industry at very cheap valuations. At P/E of 4 and clocking growth rates of 10 – 20% YoY.

    • Editor Says:

      Thank You Varun!

      Yeah! I like that stock – Yesterday I came across it – but need time to know more about fundamentals of company.

    • Bhavin Mehta Says:

      Varun, recently I bought ITDL at 36 and sold at 52. its having good business. Before big players come into this scrip I want to buy it again for long term.

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