Atul Auto has been the cynosure of a number of savvy stock pickers like Vijay Kedia, S. P. Tulsian and Ashish Chugh of hiddengems fame. Even Ekansh Mittal of Katalyst Wealth put a buy on the stock in July 2013 when it was quoting at 190. At today’s CMP of Rs. 354, there is a nice little profit for the early investors to feast on.
Now, we must take note of the concise analysis of Atul Auto made by Chirag Jain & Jinesh Gandhi of Motilal Oswal because it suggests that there is a lot more juice left in the stock.
The bottom line of the analysis is that expected revenue CAGR of 20.7% over FY14-16, volume CAGR of 20%, higher margins further from 11.5% in FY14 to 12.7% in FY16, earnings CAGR of 23% over FY14-16, asset-light business model, negative working capital, high EBITDA margins, high dividend payout (over 25% over FY08-13) and reasonable valuations of 13.4x/11.1x/8.8x FY14E/15E/16E earnings makes Atul Auto interesting.
I already have a nice little chunk of Atul Auto in my portfolio and intend to tuck into more on dips. If you don’t have the stock in your portfolio, then you need to give it serious thought.