Raamdeo Agrawal is famous for his multibagger stock picks like Hero Honda and SBI where he made a lot of money.
His latest stock pick is Atul Auto, of which he bought 100,000 shares at Rs. 260 each, on 5th November 2013, for an investment of Rs. 2.60 crore.
Atul Auto has been a great multibagger already. It has given a 113% return YTD and 255% return over two years.
| Atul Auto Key Financials | |||
|---|---|---|---|
| (Rs cr) | Sep 2013 | Sep 2012 | YOY |
| Operating Income | 109.00 | 85.95 | 26.82 |
| Total Expenses | 97.57 | 76.53 | 27.49 |
| Operating Profit | 11.43 | 9.42 | 21.34 |
| Other Income | 0.63 | 0.46 | 36.96 |
| PBDIT | 12.06 | 9.88 | 22.06 |
| PBT | 10.54 | 8.59 | 22.70 |
| Adjusted Net Profit | 7.38 | 6.21 | 18.84 |
Atul Auto is a small cap company with a market capitalization less than Rs. 300 crore. It manufactures three-wheelers at its plant at Rajkot with a capacity of 48,000 vehicles per annum.
It has been performing very well in the past few quarters. In Q2 FY 2014, the sales revenue increased 27% YOY to Rs. 108.72 crore while the operating EBITDA increased 21% to Rs. 11.43 crore. The profit after tax (PAT) increased 19% to Rs. 7.83 crore.
The company is debt-free. Also, it declared a interim dividend of 40%.
The management indicated that there were aggressive expansion plans for Atul Auto and that more variants would be launched in the near future.
In terms of valuations, in FY 2013, Atul Auto earned an EPS of Rs. 23.62 which means that at the CMP of Rs. 260, the PE is about 11. Assuming the company earns an EPS of Rs. 27 (extrapolating) for FY 2014, the PE will be ~ 9.6 times.
Interestingly, one of the early spotters of the opportunity in Atul Auto was S. P. Tulsian. In an interview given on 7th February 2013, when the stock price was Rs. 220, S. P. Tulsian had expressed confidence in the stock and predicted a market price of Rs. 260 in 6 months. He repeated his stock pick on 24th June 2013 when the stock had slumped to Rs. 180 in the wake of a correction. Since then, the stock has given a fabulous 43% return.
Ashish Chugh, of the Hidden Gems fame, has also analyzed Atul Auto in detail and recommended a buy.
Raamdeo Agrawal has boarded the train a bit late but then it is better to be late than never especially given the bright future prospects of Atul Auto.
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