Munjal Auto – Multibagger Analysis
Update: This stock really is Not a Multibagger up to date. Since the Valuation change it is No Longer a Multibagger in our view. You can check other stocks from our latest Multibaggers pack.
Futurecaps is a SEBI Registered Research Analyst providing Multibagger service to Indian Stock Market.
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.
Company URL: http://www.munjalauto.com/
Warren Buffett Checklist
|History of Consistently Increasing Sales, Earnings & Cash Flow||Yes.|
|Durable Competitive Advantage||Yes.|
|Future Growth Drivers||Yes for next 2 years.|
|Conservative Debt (long term debt < 3 Net Profit)||Yes.|
|Debt Equity Ratio||0.34|
|Return on Equity must be Above Average||28%|
|Low CAPEX required to maintain current operations||Moderate.|
|Management is holding / buying the stock||Flat for 3 years at 75%|
|Price is Under Valued (< intrinsic value)||Yes|
|Stock Price is consolidating (now)||Price at yearly peak|
|Stock Price is growing in past years along with EPS growth||Yes.|
Additional Futurecaps Checklist
|Consolidated PE, PB Ratio||PE 8 (good), PB 2 (good)|
|Cash Flow Positive, Net Profit % greater than 8%||Positive Cash Flow, But Net Profit around 5% only.|
|Paying Dividends, Tax||Yes|
|EPS Growth Rate||20% (good)|
|Latest Quarter EPS Growth||Flat. Be alert.|
|Expected Gain in 5 Years||Considering moderate EPS growth of 15-20% the company should grow 8-10 times in 5 years.|
|Power of Brand||Yes. Part of Hero Group of companies.|
|Corporate Governance, Reputation of Leaders||Yes.|
|Fraud reported||Not in current search.|
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.
2-3% of your portfolio.
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.