what is the Future Multibagger company in "Automobile Ancillary " Sector ?

@Sachin pathak

in your study any multibagger stocks in this sector ?

 

Well does JBM exports......can you confirm this when (1) almost 85% of its sales is to Maruti Suzuki (2) the management doesnt mention Europe to be a key risk

Thanks

 

I was the first to add a name to your list : motherson sumi. FIEM is another company i am watching

 

both are good companies

 

FIEM Industries

Investment Rationale:

Strong Client Base: FIEM has a strong client base of more than 50 OEMs and is supplying to its prestigious customers since its inception. It has significant market share for supply of automotive lighting & signalling equipments and rear view mirrors to Two-wheeler and Four-wheeler OEMs. The company is the leader in the scooter segment with 85% market share and India is one of the biggest two-wheeler markets.

India is attracting lot many global OEMs who are looking for geographical expansion and also putting their plants in the country

HMSI – biggest revenue share: HMSI currently accounts for ~45% of FIEM’s revenues. HMSI is virtually the leader in every country it operates in, except China. For HMSI, India is the fifth largest overseas two-wheeler market. Aggression of HMSI has already started to play out reflected from the fact that its market share has inched up to 22% in FY15 from 8% in FY07. HMSI had signed a State Support Agreement with Gujarat government in September for setting up their two-wheeler manufacturing plant at Vithalapur village with an investment of Rs.1,100 cr. It will start production in fiscal year 2016. To cater to this demand, FIEM is putting a Rs.75 cr plant at Viramgam, near HMSI’s plant. Honda Motorcycles and Scooter India (HMSI) two wheeler giant is planning to add 9 new two-wheelers in its portfolio in 2015. The commissioning of the plant at Vithalapur by HMSI in 2016 will give a further impetus to sales of FIEM as it is the main supplier of automotive lighting & signaling equipments and rear view mirrors to HMSI in India. Honda Motorcycle & Scooter India is aiming to sell 6.4 million vehicles by 2016, and sees the year 2015, as a game changer led by 9 new models lined up for launch in 2015

Entry into LED – space growing at a fast pace: FIEM has diversified into the LED luminaire business and integrated passenger information systems (IPIS) segment that caters to buses and railways. This could potentially be a game changer for the company. Revenue and profitability to get a boost on the back of LED

Integrated Passenger Information Systems – a new segment : Integrated Passenger Information System with LED Display (IPIS or PIDS) is an electronic information system which provides real-time passenger information. Passenger information delivered at relevant locations along bus routes is an important part of this strategy. Based on industry estimates, the Indian Railways is looking to invest ~Rs.200 bn over the next five years on display system modernization across trains and rail platforms. FIEM has played a key role in helping its partners deliver an effective solution. The company has successfully installed this Passenger Information System in many DTC buses in Delhi operating at different routes and has also installed the same in many of the school buses of Delhi. Association of State Road Transport Undertakings has also inspected the Company’s LED based Destination system and found it satisfactory. It has also received approval for Integrated Passenger Information System with LED Display (IPIS) from Ministry of Railways - Research Design and Standard Organization (RDSO) for manufacture and supply of this system (consisting of Train indication, Coach Guidance & PC based announcement). FIEM is looking for big business opportunities from Railways, Central & State Government, Metro, etc

New ventures – to add value gradually, still at start-up mode: FIEM has signed an MOU with Honda Locks Mfg. Co. Ltd. Japan and Toyota Tsusho Corporation, Japan for a potential JV in India for manufacturing Key Sets, Door Mirrors and Outside Handles. These are group companies of Japanese conglomerates Honda and Toyota respectively. The Key Sets will be for four-wheelers and two-wheelers. It has also signed an MOU with Yamato Industrial Co. Ltd., Japan for manufacturing automotive parts, including Control Cables, Pipes, Resin Dies, Throttle Wires, Sensors & Switches. these two new potential JVs will help FIEM diversify its product base further and offer export opportunities

revenue growth at 24% CAGR in FY15-17E with PAT registering a growth of 39% is expected. At CMP of Rs.600 can give upwards of 30-35% return in next 12-15 months.

Note: 70% + sales are from HMSI and TVS a concentration risk to be kept in mind.

 

Will help if you back this up with some rationale.

 

@Sachin pathak JBM is doing badly on stock performance maybe because of technical reasons also, although I am not a technical expert. JBM's next trigger can be also the new stream of bus line which they plan to launch via JBM auto. Valuations wise also, there is a lot of comfort in JBM and JBM Auto companies. They are suppliers to Maruti, but now the diversification to commercial vehicles space is going to be the next trigger. I believe the next boom is going to be in CV segment in transportation space especially. Because the cities in India are clogged with cars and there is a push from the govt. to reduce pollution. Other companies which will be interesting is SML Isuzu.

 

Gabriel ?

 

@nilesh67 ,
Gabriel India Ltd is a good stock ...
50 years old company ...very good selection

 

@ rmsc

Gabriel is a multibagger?

Whats the analysis on Gabriel?

 

i said it is a good stock

 

So not a multibagger.....Right

Also can you provide some analysis about the company so that others can assess

 

According to me i will avoid auto manufacturing stocks, there is always a risk we have enough players in this segment try your money in other segment it will give you returns faster than auto mfg stocks. sharing my view

 

@uppu

Auto manufacturing or auto ancillary? I hope you know that both are different segments

 

@Sachin typo error

 

Sachin - the share price of Jbm auto is around INR 180. It's EPS is around 6. Not sure why you are saying it is a single digit PE ( I rushed to check hoping it was the case, so then we could start buying) am I looking at the wrong share ?

 

I have generally stayed away from auto and auto ancillaries, possibly because I am too closely associated with it and all I see are the problems in it.

notwithstanding all the potential and growth, I see a sector with technological and margin issues and linked to a sector whose growth is not matching its potential.

I stay away from ancillaries because my view is the OEMs are increasingly transferring the margin pressures to ancillaries. So one thing to look for is a business which also caters to the replacement market, where margins are higher.

Of course, having said all that there will be out performers. But overall I don't find this sector compelling at all

 

what about Force Motors?

 

Based on what all the analysts are saying I am sure it is hard to argue against it. Looks to be an outperformer even as per Daljeet of India Nivesh.

 

Growth is predicated on growth onfBMW and Mercedez in India AND on them continuing to source engines only from them. Is there an exclusivity element to the supply contract? No idea.