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Tuesday, August 23, 2011

Maharashtra Scooters Ltd:-Buy/sell/,growth prospects and recommendation,news and results,target price and analysis,view and outlook,multibagger

Scripscan:Maharashtra Scooters Ltd

Story:The company manufacturers pressure die casting dies, jigs and fixtures primarily for two and three-wheeler industry but since the stop of production of scooters, this company currently does nothing much. The company has been making losses consistently. It was only in Q3FY11 that it posted a net profit of Rs.22 crore which was mainly on account of the other income component of Rs.27 crore. Even in Q1FY12, other income component at Rs.2.38 crore is much more than the net sales of Rs.1.06 crore. Historically, its other income has always been more than the net sales. With operating expenses at Rs.11 crore, the company ended the quarter with a net loss of Rs.7.38 crore, v/s Rs.33 lakh in Q4FY11 and net loss of Rs.11 lakh in Q1FY11. On 6th June the company announced a VRS scheme for its workers; wherein 171 workmen opted for the same. Its total VRS bill is at Rs.21.62 crore and it will be paying it off in four instalments, spread over the four quarters. In Q1FY12, it recognised a charge of Rs.5.40 crore for this VRS.The company’s shareholding pattern is interesting, with Western Maharashtra Development Corporation (WMDC) holding 27% stake and Bajaj Holding with 24% stake. It is a JV between the state Govt and Bajaj Auto and though the state has been saying that it wants to get out, it does not seem to be having the will to do that. Given the consistent loss making track record, it does not deserve the current stock price. Yet the price is based on two things – firstly, WMDC can now sell its stake to anyone at the prevailing market rate and secondly, its fantastic shareholding in group companies. It holds 2.34 % stake (67.74 lakh shares) in Bajaj Auto, 2.34% stake (33.87 lakh shares) in Bajaj Finserv and 4.47% stake (16.38 lakh shares) in Bajaj Finance. On current market prices, these holdings are today worth Rs.1283 crore. And this alone has kept the share price at Rs.300, defying other fundamental logic.

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