Rane Madras is an auto ancillary company having two divisions. First is steering and suspension linkage products, and second is die casting. If you see, the company is having 72 percent market share of suspension and steering linkage products and catering practically to all the automobile makers in the country. They have about six plants, of which four are for the steering and linkage products, and two are for die casting.

In fact if you first take the financial performance of the company for FY17 standalone basis for whole of FY17 because the company has only come out with Q1 numbers, Q2 numbers are awaited on November 22. So first we take on standalone FY17 numbers, the topline was Rs 1,000 crore, PAT was Rs 19 crore, and EPS Rs 17.40. However, that has got sharply reduced to maybe EPS with Rs 4.10 on consolidated basis largely because of one reason that company has acquired one die casting unit in January 2016 and that has impacted for whole of FY17 having a topline of closer to about Rs 210. It was EBITDA negative but that unit also having turned around just last quarter though the company don’t declare their consolidated numbers on a quarterly basis. So this is a very classic case of turnaround. I hope that H2FY18 will see better performance coming in on the consolidated basis.

So taking that into consideration, standalone EPS of Rs 17, company paid a dividend of 60 percent i.e. Rs 6 per share. If we take a Q1 standalone numbers, they have been in-line or maybe slightly better than what we have seen for the corresponding quarter of the previous year. Again, if you see because of that acquisition, the company has seen its debt rising to maybe about Rs 300 crore so promoters have issued the shares and warrants to themselves in mid-September at Rs 547 per share and have infused about Rs 80 crore in the company. So, taking all this into consideration, and the equity pattern, shareholding of the promoters having raised to about 62 percent, and Rane Group having strong presence in the auto and auto ancillary space.

Source – moneycontrol.com


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