Scripscan:Ahmednagar Forgings Ltd
Cmp:124
Target:148
Percentage return:20%
Duration:3-4 months
Story:Ahmednagar Forgings Limited manufactures and sells forging and machined automotive components. The company also offers cold forged parts and high tensile fasteners.Ahmednagar Forgings is the largest forgings manufacturer in the small and medium component segment.AFL's products include piston assemblies for railway locomotives, crown wheels and pinions, rear-axle shafts, hub assemblies, crank shafts for heavy and medium commercial vehicles applications, two-wheeler crank shafts, steering knuckles, connecting rods and caps. AFL's domestic clients include Ashok Leyland, Bajaj Auto, Hero Honda, Mahindra & Mahindra, Tata Motors etc, and the railways and the defence. The company is now controlled by the Amtek group.For 2009-10, AFL had reported EPS of 17.33 and Cash EPS of 26.40. Stock is trading at just 7.xFY10Eps and 4.5xFY10 Cash Eps which is really low by any standards.AFL has already reported decent rise in Q1 nos with EPS rising to Rs 5.40.I estimate that for 2010-11, AFL should achive sales of Rs 850 crs and Net Profit of Rs 90 crores translating in EPS of Rs 24.50.Ahmednagar Forging is currently trading below its Book Value.Scrip is also trading at 5.xFY11E Eps.AFL should quote at a higher valuations going forward and thus one can act accordingly as per the assigned target.The immediate trigger for the company would be the quarterley earnings which is expected this month itself.A good buy altogether.
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