Dharmesh Kant of IndiaNivesh has to first get full credit. Exactly a year ago (04.08.2014), Dharmesh Kant recommended a buy of Force Motors on the logic that it has “high standards of technological excellence and quality”. He also emphasized that Force Motors is debt-free, has huge cash on books and is available at cheap valuations. In addition, he gave eleven solid reasons why the stock was a great buy at that time. On that fateful day, Force Motors was languishing at Rs. 563.
Porinju Veliyath was next in line. He keeps a keen look out for such stocks. In an interview to ET on 09.10.2014 (when Force Motors had already doubled to Rs. 1,386), Porinju gushed out lavish praise for Force Motors. He said:
“I am very proud of Force Motors. I bought this company three-four months ago. Of course this is a very well known company. I thought this was priced at around Rs 500-600 crore of market capitalisation. We were holding around 23 per cent stake in Bajaj. They were exiting the company and that was the trigger probably to look at Force. Last week we had holidays and whenever you go out to a tourist destination, you will be finding a lot of Force Motors vehicles. They have over 60 per cent market share in that important segment of the automobiles in India, which will still grow much further, and their relationship with Benz and now BMW is coming up.
People used to discourage me not to buy Force Motors. They used to say the management is not good, they bought an aircraft for 150 crore last year and other irrelevant details. But you cannot really judge a company with one or two events. So I found that was not enough reason to ignore this company when it was priced at 500-600 crore of market cap and had a beautiful balance sheet. The balance sheet size reserves are more than Rs 1000 crore and the company was available at half the price. So now it is working and there is a long way to go. There could be some correction. But please do not buy the stock just because I am talking about it.”
Daljeet Kohli came a little late to the party. However, it is better late than never. He also is very ebullient about Force Motors and called it a “multibagger in the making”. He said:
“This company is going to scale up its business to a large extent which is right now in very few numbers, which will become into five-digit numbers. The company is talking of a total to 20,000 engines, and then increasing it to 50,000.
This will mean that this company can grow multi-fold in size in next three to five years. All this will be done with very high quality of management.
We have never heard anything from that. This is the quality being chased and the expectation that this can be another multibagger like Bosch or Eicher. So those who are holding up the stock should not even think of anything. They should just stick to it. Those who have not bought it will feel that they have been left out at every given price. So, we will rather say that if you have to have it in your portfolio, you should take that plunge, so you should buy.”
Today, Force Motors is, after a series of upper circuits, standing tall at Rs. 2,856.
This means that Dharmesh Kant and everyone else who came after him has taken home gains of up to 400% in less that a year’s time.
There are two reasons for the extreme bullishness amongst the ace investors for Force Motors.
The first is that the Company reported blockbuster in Q4FY15 as well as Q1FY16 results.
|FORCE MOTORS LTD – QUARTERLY FINANCIAL RESULTS|
|PARTICULARS (Rs. CR)||JUN 2015||JUN 2014||% CHG|
The second is that the Company has set up a new plant in Chennai to exclusively make engines for BMW. Prasan Firodia, MD, revealed that Force Motors is in the “unique position” of being the only company in the World to produce engines for BMW and Mercedes. He said:
“First of all, this is a very unique situation because there is no company currently in the world who is producing engines for both BMW and Mercedes and I am very proud to say that Force Motors is the only company in the world who is producing engines for these top European brands. We just inaugurated our new engine plant for BMW in Chennai day before. This is a dedicated facility for them in Chennai and this facility has the capacity to produce 20,000 engines on an annual basis, based on the current installed capacity.”
Now, the important aspect is about the future and whether there is any scope for us to sneak into the stock.
Daljeet Kohli is very plain in his advice. He has advised investors to “plunge in” on the basis that Force Motors can grow multi-fold in size in next three to five years and that all this will be done with very high quality of management.
Also, Daljeet has equated Force Motors as being the next “Eicher Motors” and “MRF”. Now whether Force will live upto those lofty expectations requires to be seen.