Hi guyz,
Kalnik and SSWL has joined hands to start a plant in Gujarat for manufacturing Alloy wheels – where Kalnik already has mastery in making and SSWL has market knowledge. It has to be an agreement between both the parties to take a stake in the company at 640/- and have a decision taking authority at the board level (for Kalnik). If Kalnik goes and get the shares from the open market (simply it can get in next 2 days – daily volume of 2lac shares), it would not get the control required for doing business. I think its a green flag.
The worry to me is the ROE and ROCE – ROE is around 11.94% and ROCE is much less around 7.50%.
If we conduct du pont analysis – financial leverage is high enough, NP margins are higher than the peers or almost same, the problem seems in the Asset turnover. Sales are not growing at good rate. Company claims to have bagged great orders recently, but the same is not getting reflected in its performance. Sales of other peers have grown decently. Any clue/hint here.
What about the mgmt – I feel mgmt is decent enough – TATA steel and other global players are its partners. But, need to dig more into integrity of promoters. Anyone having inputs here?
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