Stock Idea: Mazda Ltd.

Although Mazda Ltd. (Code: 523792) (Rs.66) is not expected to record spectacular growth in the coming year, it is still a value buy at current levels. For FY09, it reported 35% rise in sales to Rs.80 cr. and 40% increase in PAT at Rs.9.25 cr. posting an EPS of Rs.22. It is among the few engineering companies in the world that manufacture very specialised, high technology and critical equipments for various industries like power, refineries, fertilizers, chemicals, nuclear, sugar, paper, food, pharma etc. Broadly, its product profile is segmented into vacuum systems, valves division, air pollution control equipments, crystallisers and evaporators. Notably, it has a technical collaboration with the world renowned Croll-Reynolds Inc. USA, which holds 12% stake in the company. Besides engineering, it also has a biotechnology division dealing in carbohydrates, rare sugars and other bio-chemicals. Lately, it has diversified into manufacturing and exporting soft drink concentrates, essence, jams etc. in a small scale. However for Q1FY10, it recorded 15% fall in sales and profit to Rs.15 cr. and Rs.1.70 cr. respectively. Accordingly, it may end FY10 with sales of Rs.80 cr. and net profit of Rs.8.75 cr. i.e. an EPS of Rs.20 on its tiny equity of Rs.4.26 cr. Fundamentally, the company is on a strong footing with very low debt:equity ratio and good reserves. At an enterprise value of Rs.30 cr. and P/E multiple of 3 times, this scrip is trading fairly cheap. Considering the market sentiment, one can even buy it for good short-term gains too.
Source: Internet (Moneytimes)