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30 December 2010

A GOOD RIDE

A very interesting company came to light one-day while I was toying with certain filters. MAJESTIC AUTO. A Rs 112.40 crore market capitalisation company with a last quarter PAT of Rs 4.75 crore and historic PE of 5.41 at a current market price of Rs 108.

At a handsome ROE of 39 percent, net margin of 14 percent and a reducing debt equity of .74, the company is financially on a stable platform.

Of an impressive pedigree, the company has been turned around in the past four years by its promoters, the Hero Group, who have a 75 percent holding. From being a manufacturer of motorised two wheelers (read mopeds!) it has successfully transitioned to an auto component manufacturer with 60 percent of the sales coming from mufflers and 11 percent from spokes. Not the most glamorous of product lines but with a direct linkage to the darling of auto industry - motorcycle manufacturing.

I would buy with a target of doubling in three years.

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