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Sunday, November 1, 2009

Machino Plastics Ltd:Future potential and growth prospects outlook

Scripscan:Machino Plastics Ltd

Story:Machino Plastics is an auto ancillary of Maruti. This company is located in Gurgaon next to Maruti’s plant in Gurgaon. This company manufactures moulded components for Maruti, which includes bumpers, instrument panels and grills.Most of the sales of the company is to just one vendor, which is Maruti Udyog. Machino is a company where Maruti Udyog holds 15% stake and Suzuki Motor Corporation also holds 15% stake. This, when added to the promoters' stake, takes the total stake of the promoters to about 74%.This company has got a track record of uninterrupted dividend for the last 18 years. Even during the time when auto ancillaries were not doing well, this company was a regular dividend payer, which only talks about the investor friendliness of the management.This company enjoys very healthy cash flows and provides for huge depreciation in the balance sheet. This company has equity of about Rs 6.15 crore. Last year fy09, they provided about Rs 10 crore of depreciation in the balance sheet. The cash EPS last year was Rs 15.5. So we have an auto ancillary, which is available at price to cash earning ratio of slightly over 3.The company has been ploughing back all their cash for expansion of the capacity. As against an equity of Rs 6 crore, they have a gross block of more than Rs 175 crore.This company also has a joint venture company called Machino Basell Limited, where they hold 50% stake.Hence, this is a company, which is trading at a market cap of just under Rs 30 crore, and is such a high dividend paying company. This company also holds about 4 acres of prime land in Manesar, which would again be valued at a couple of crores. So at the current price of Rs 46-47, the stock is of pure value.

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