[T.S.R:10843] Shivam autotech- Exclusively first hand info to TSR google group subscribers

Dear Friends,
                   TSR had a Long term outstanding Buy call on shivam autotech. approx three months back at 48-58 range( avg54). We will shortly make the report Public.Before that will share some facts about the company with TSR google group subscribers. Before I start I would request people who have any query to mail me at contact@Niftyviews.com.
              Shivam auto is a Hero Honda Group company and is owned by Hero Cycles. Company has two plants in Binola,Haryana and Haridwar,Uttarakhand. when almost all auto companies were seeing a contraction in sales,Hero Honda was seeing a mild growth.
Last month,August 2009 Hero Honda sales were up 35.8%. Historically inhouse auto ancillary makers have traded at a discount to Auto Ancillary companies with an independent management. I believe there is a strong case for a rerating in this stock. Hero Honda had started operations in a new plant in Haridwar way back in 2008. The Incremental one lakh Motorcycle sales has probably come from the ramp up operations of the same plant.

How does it benefits Shivam autotech?

Shivam autotech has invested 180 crs in its Haridwar plant.The plant has become operational only in April 2009. The last quarter results have not been great. At the same time when one compares Shivam's Forging Businesses with the peers. Shivam has been able to outperform the more established players like Bharat Forge. If the company manages to report incremental sales going ahead we would be able to make a two bagger in the stock. The valuations cannot be compared with Hero Honda but at the same time the valuation of the company should be somewhere between 10X-17X its FY10 earnings
  Do note that even after a 20% upmove yesterday.Stock trades at FY09 EBITDA OF 2.6x. PE OF 7x reported earnings. Once the gains from the 180 crs expansion starts accruing the stock will no more remain the same.

Happy Investing...

Regards
Vinayak.
www.niftyviews.com

Do note that Directors,Clients and Employees of Team StockResearchers Pvt Limited have long term interests in the stock.
                  


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