Scripscan:Bimetal Bearings Ltd
cmp:287
Code:505681
Story:Bimetal Bearings, is a South India-based auto ancillary unit, manufacturing thin-walled bearings, bushings and thrust washers. For the year ended 31 March 2011, the company posted a net sales of Rs. 153.76 crores compared to Rs. 119.61 crores in the year 2010. The company's net profit came flat Rs. 9.14 crores in the year 2011 compared to Rs. 8.94 crores in 2010.The company also exports its products which contributes nearly 25-30%. The company also maintains a very clean balance sheet with negligible debt and surplus cash and other investments. The company also maintains a generous dividend payout of about 35-40% of net profit.In 2011, the company celebrated their golden jubilee. It has very good track record of paying dividends and also maintains a debt free status. But, for the past 4-5 years the company's return on equity has been in single digits. The company could post rise in sales over the years but its net profit has been flat at Rs. 8-9 crores. The reason which I found was that, they depend on diesel generator for significant amount of their power requirements and the cost of grid power has also been increasing every year. As of 2011, their average power cost including grid power and diesel generator based power works out to about Rs. 8.80 per unit. This high power cost shaves of nearly Rs. 5-7 crores of net profit as of 2011, assuming the average grid-based power cost of Rs. 4.5 per unit.In 2011, the company utilised hundred percent of the installed capacity which can pave the way for future expansion. As on date, at the share price of about Rs. 287 the company is trading at below its book value of 329rs. At about 200 plus levels this stock should be a good buy and can at the maximum reach Rupees 400+ levels in 2 to 3 years time as the power cost gets reduced due to lot of power plants getting commissioned in Tamil Nadu in the next few years.
Source:Hemant
Important Disclaimer&Privacy policy
This blog does not share personal information with third parties nor do we store any information about your visit to this blog other than to analyze and optimize your content and reading experience through the use of cookies.You can turn off the use of cookies at anytime by changing your specific browser settings.This privacy policy is subject to change without notice and was last updated on 20.3.2013. If you have any questions, feel free to contact me directly here: arunsharemarket@gmail.com
Investment in equity shares has its own risks.Sincere efforts have been made to present the right investment perspective.The information contained herein is based on analysis and up on sources that I consider reliable. I,however,do not vouch for the accuracy or the completeness thereof.This material is for personal information and am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.The stock price projections shown are not necessarily indicative of future price performance.The information herein, together with all estimates and forecasts, can change without notice.
