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SENSEX: 74001.44 1005.13

NIFTY: 22294.05 170.40

Multi Baggers

Sushil Finance

5.30 AM Jan 1st 1970

Alicon Castallo

BSE ID : 531147     NSE ID : ALICON

RECOMMENDED PRICE 152.40

PEAK FROM RECO 1111.00 629.00%

CURRENT PRICE 828.50 Resource id #18

During the quarter, the company has received new orders from Tata Motors Jaguar, Daimler USA and Wabco. Going forward, the Management expects the improvement in four-wheelers demand would scale up company's top-line and profitability.

Alicon Castalloy Ltd. (ACL)

The top-line continued to be sluggish on account of extended slowdown in the four-wheelers, commercial vehicles in particular which has picked up some momentum only in July, 2014. Following are the highlights and excerpts of our conversation with the Management following the results.

Q1 FY15 Result Highlights (Standalone)

During Q1 FY15, the top-line registered a moderate growth of 0.4% YoY to 1,040.1 mn. The growth from two-wheelers was largely offset by the continued lacklustre performance from the four-wheelers. In addition, the EBITDA margin witnessed some pressure primarily on account of escalated raw material costs as a percentage of revenue. The company also had to dealt with increased wage-rate by the state government which restricted the improvement in profitability while offsetting the impact of cost-savings. For the quarter ended June 30, 2014, the company recorded a profit after tax of Rs.30.1 mn as compared to Rs.40.8 mn in Q1 FY14. The Q1 FY15 earnings per share stood at Rs.2.74. Going forward, the Management expects the improvement in four-wheelers demand would scale up company's top-line and profitability.   

Q1 FY15 Result Highlights (Consolidated)

During Q1 FY15, the top-line de-grew 2.2% YoY to 1,264.1 mn with Illichmann Castalloy contributing Rs.224.0 mn. On the consolidated level also, the EBITDA margin witnessed a reduction on account of increase in employee costs and other expenses, as a percentage of revenue. The EBITDA margin stood at 8.4% in Q1 FY15 as compared to 9.0% in Q1 FY14. The effective tax rate which has come down during the quarter is expected to correct at the previous levels during the rest of the year. The consolidated bottom-line stood at Rs.33.9 mn in Q1 FY15 as compared to Rs. 45.4 mn in Q1 FY14 as the net margin fell from 3.5% to 2.7%.

Other Updates

During the quarter, the company has received new orders from Tata Motors Jaguar, Daimler USA and Wabco. Commenting on the performance of the company's European subsidiary Illichmann Castalloy, the Management stated that though the top-line growth is not visible but the acquisition has helped the company to extend their presence and include some international OEMs in their clientele as mentioned earlier. In addition, the company is working on new products which would be launched during the current fiscal. The Management also stated that the company might go for some capacity expansion during the current year to cater to the expected increase in demand.

We maintain our estimates for the company and retain our positive outlook for the company, going forward. Accordingly, we continue to foresee a good potential upside from current levels for the long term horizon with a price target of Rs 189.

Disclaimer: This report is prepared for the exclusive use of Sushil Group clients only and should not be reproduced, re-circulated, published in any media, website or otherwise, in any form or manner, in part or as a whole, without the express consent in writing of Sushil Financial Services Private Limited. Any unauthorized use, disclosure or public dissemination of information contained herein is prohibited. This report is to be used only by the original recipient to whom it is sent. This is for private circulation only and the said document does not constitute an offer to buy or sell any securities mentioned herein. While utmost care has been taken in preparing the above, we claim no responsibility for its accuracy. We shall not be liable for any direct or indirect losses arising from the use thereof and the investors are requested to use the information contained herein at their own risk. This report has been prepared for information purposes only and is not a solicitation, or an offer, to buy or sell any security. It does not purport to be a complete description of the securities, markets or developments referred to in the material. The information, on which the report is based, has been obtained from sources, which we believe to be reliable, but we have not independently verified such information and we do not guarantee that it is accurate or complete. All expressions of opinion are subject to change without notice. Sushil Financial Services Private Limited and its connected companies, and their respective directors, officers and employees (to be collectively known as SFSPL), may, from time to time, have a long or short position in the securities mentioned and may sell or buy such securities. SFSPL may act upon or make use of information contained herein prior to the publication thereof. The Investment horizon of this report is approximately 1 year. Any calls which lapse the time duration of a year would be auto closed without any further notifications/updates. Clients are requested to keep track of the same.

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