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Tuesday, January 17, 2012

Eimco Elecon (India) Ltd:-Buy/sell/growth prospects and recommendation,news and results,target and analysis,view and outlook,multibagger

Scripscan:Eimco Elecon (India) Ltd

Story:Eimco Elecon (India) Limited engages in the design, development, manufacture, installation, and servicing of mining and construction machines, hydraulic cylinders, and accessories in India and internationally. Its products include side dump loaders, load haul dumpers, rockershovel loaders, dump trucks, air motors, hydraulic cylinders, blasthole drill, and AL 120 wheel loaders. The company’s products are used in underground and opencast mines in mining and construction sites.The average ROCE of the company over the last five years is 15.728% with average operating profit margin of 18.984%. The margins were highest in the years between 2007 and 2009 and in years 2000 and 2001. Net profit margin too were highest in years 2008, 2000 and 2001, in low double digits. The margins have shrinked to 7.2% in 2011 which is lowest in the last 13 years. This shows that the business is under severe margin pressure but still the margins are much higher than the average for all the companies in India. The company is debt free with (net current assets + investments) worth INR 114.05 crore. The assets turnover ratio of the company decreased from 1.81 to 1.06 between 2002 and 2006 but the same has improved again to 2.00 in FY2011. The company had negative cash-flow in FY2009 but the average operating cash-flow over the last five years is equal to the net-profit reported by the company. So the company is providing proper depreciation and not over-reporting the profits.The company's average total income has risen from INR 72.98 crore between FY00-FY02 to INR 167.49 crore between FY09-FY11, i.e. 9.67% compounded annually. The net profits during the same time has risen from INR 8.653 crore in FY00-FY02 to INR 13.81 crore, i.e. 5.33% compounded annually. The company had three down years in profits over the last ten years, FY03 down by 45.27%, FY06 down by 5.83% and FY10 down by 16%. The revenues declined in two consecutive years in FY06 by 7.24% and in FY07 by 3%.

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