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Sunday, October 16, 2011

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

Scripscan:SML ISUZU Ltd
BSE code:505192

Story:SML Isuzu was known as Swaraj Mazda Limited. This is one stock which I feel is a definite portfolio bet. It should be kept into portfolio rather than buying huge quantity better to buy and forget this stock.It has a promoter name Sumitomo Corp- 1.54 trillion Japanese Yen market cap, it is a leader in its space. Recently Isuzu also acquired 4% stake as given in the shareholding pattern. There are lot of stories that is going to come up for this particular stock. I was trying to go through what kind of synergies that Sumitomo or Isuzu can come in for India. I felt that they offer tremendous opportunity for us because we are lacking in each and every space where these companies have expertise – aerospace, railways they are the pioneer into this especially Sumitomo Corp. If I look into their profitability perspective they posted an EPS of Rs 25 for last year. They paid a dividend of Rs 8 which includes 15% special dividend. For this year our estimate is around Rs 31.50 and I would not be surprised that the company do somewhere around Rs 33.50 for this year.The company with Sumitomo parentage is not available at 12 times forward, it is a surprise for me. It is one bet where I would like to take a year on year call with their performance and business that they are trying to work out for India. This particular company has got tremendous potential from two perspective. One it is also a candidate where the promoters along with other partners would increase their stake close to 75-76%.There is hardly any float into the market. If someone wants to buy 5000 shares he has to actually go and bid for Rs 30 higher to get that stock because this stock is hardly traded on the exchanges. We have been suggesting that add on daily basis, add a small quantity and accumulate. If you have got patience this stock is one stock where I feel in the next three years the EPS could be shown close to Rs 50 mark.Given a PE multiple that we normally try to assign to Japanese company it works out around at 18-19 mark. The company would be paying you dividends which will work out close to Rs 30-35 on cumulative basis for the next 3-3.5 years. From every perspective this is one bet which should be looked on from a portfolio perspective and should be added and accumulated at these current levels. We have got a target of Rs 1,000 saying that a three figure stock to four figure stock from three years perspective. I won’t be surprised that the stock do even better from thereon. We took a similar call for Eicher Motors and we feel that they have done tremendously well from the similar space. Looking into various school buses I think SML Isuzu has got contracts where they are supplying in terms of school buses. Their ambulance and other things these are brands which should be kept and it is current traded at very low valuation given to its potential.

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