Eimco Elecon (India) Ltd Initiating Coverage Report By IndiaNivesh

Eimco Elecon (India) Ltd is in the business of Manufacturing, Marketing and Servicing Equipment for Mining and Construction. It is one of the leading suppliers of underground coal mining equipments in India. It was first to introduce the intermediate technology of Side Dump Loaders (SDLs), Load Haul Dumpers (LHDs) and Rocker Shovel Loaders in India to partially mechanize the underground Coal and metalliferrous mines and continue to be market leader since then. In addition the spares business which is a high margin business provides a stable cashflow and contributes around 50% in overall sales. Introduction of new products and entry into open cast mining products to act as a key catalyst for the stock. Further the company has strong balance sheet with liquid investment of Rs.198/share. We initiate coverage on Eimco Elecon (India) Ltd and recommend BUY on the stock with SOTP based target price of Rs 678.