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Multi Baggers

Hem Securities

5.30 AM Jan 1st 1970

SML Isuzu

BSE ID : 505192     NSE ID : SMLISUZU

RECOMMENDED PRICE 1157.20

PEAK FROM RECO 1454.50 25.69%

CURRENT PRICE 1825.00 Resource id #18

SML Isuzu is well on track with its capex plan envisaging an outlay of Rs. 220 crores to be implemented over next three years. We initiate a 'BUY' on the stock with a target price of Rs 1500 with the medium to long term investment horizon.

SML Isuzu

SML Isuzu Limited (SMLI) is a trusted and reliable commercial vehicle manufacturer since 1985. It has over 25 Years of experience in producing Light & Medium commercial vehicles. SMLI is a first company to manufacture and supply state of the art fully built Buses, Ambulances and customized vehicles. Starting from 2-wheel bases, the SML model range now spans 5-wheel bases. Carrying capacities have spread from 2.5 ton to 8.0 ton in the goods segment (GVW 5.2 to 12.0 ton) and from 13 to 52 seaters in the passenger segment.

Current portfolio of specialty vehicles include Ambulances, Water Tankers, Tippers, Delivery Van, Dumper Placers, Fire Tenders, 4-Wheel Drive Truck, Troops Carrier etc. The company exports to Bangladesh, Nepal. Nigeria, Ghana, Zambia, West Indies, Sri Lanka etc. The company has installed capacity of 18000 vehicles. The company has 120 dealers (including export), 18 authorized service centres and 18 spare parts distributors.

SML Isuzu represented the coming together of three powerful Corporate brands: Swaraj symbolizing the best of Indian technology and engineering, Mazda symbolizing R&D and innovation edge on a global scale and Sumitomo representing age-old international trading experience and linkages.

The Commercial vehicles industry is expected to perform well driven by the economic growth. Economic growth would be driven by infrastructure investments in areas such as roads, bridges, power generation, information technology, civil aviation, sea-ports, health, education etc.; leading to increased demand for commercial vehicles in the coming years.

Valuation

Improved capacity utilization, higher per unit realization owing to lower discounts, expanding dealership network and new product launches bodes well for the growth of SML in times ahead. We believe the company is trading at an attractive valuation at 31.42x and 24.98x of FY16EPS of Rs.36.60 and FY17EPS of Rs.46.04. We initiate a 'BUY' on the stock with a target price of Rs.1500 (appreciation of about 30%) with the medium to long term investment horizon.

For full details, Click on the attachment.

 

Disclosure of Interest Statement - Company Name

1. Analyst Ownership of the Stock - No

2. Hem & its Group Company Ownership of the Stock - Yes

3. Hem & its Group Companies' Director Ownership of the Stock - Yes

4. Broking relationship with company covered - No

Disclaimer and Disclosure: This document is prepared for our clients only, on the basis of publicly available information and other sources believed to be reliable. Whilst we are not soliciting any action based on this information, all care has been taken to ensure that the facts are accurate, fair and reasonable. This information is not intended as an offer or solicitation for the purchase or sell of any financial instrument and at any point should not be considered as an investment advise. Reader is requested to rely on his own decision and may take independent professional advise before investing. Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited, Directors and any of its employees shall not be responsible for the content. The person accessing this information specifically agrees to exempt Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and further agrees to hold Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The companies and its affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities there of, company (ies) mentioned here in and the same have acted upon or used the information prior to, or immediately following the publication. Analyst Certification The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

SMLIsuzu_PYT.pdf

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