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Subros Limited

Auto Air conditioning solutions

            Market Price Rs 81 (FV 2 )              Analyst : Janak Shah (M.B.A. Finance)

            Market Cap Rs 496 crs                     Date:  19th Feb 2016

            Target : Rs 120                                  Time: 1 year target

About the Company:

Subros Limited, founded in 1985 as a joint venture public limited company with 40% ownership by Suri family of India and 13% ownership by Denso Corporation & Suzuki Motor Corporation each, is the leading manufacturer of thermal products for automotive applications in India, in technical collaboration with Denso.Subros has manufacturing plants at Noida (2 nos.), Manesar, Pune, Chennai and Sanand with an annual capacity of 1.5 Million AC Kits per annum beside a well equipped R&D Center and Tool Room at Noida.

Products:

Subros has a wide range of reciprocating compressors, compatible with eco friendly Refrigerant. These compressors are available in different size and capacity to suit all requirements and engine power. Their unique design ensures that these compressors draw minimum power from engine and work efficiently and silently. The range of vehicles include Passenger vehicles, Buses, Rail transport system, Truck cabin Ac system and off roader Ac systems.

Financials:

The bank has  a very good dividend record of a healthy 20% payout and a book value of Rs 55 plus. In the year 2014, the sales were at Rs 1171 crores and Net profit of Rs 20.26 crs and for the year 2015 the sales were at Rs 1197 crs and Net profit was at Rs 20.32 crores. This year is going to be better with Sales of Rs 1250 crores and Net profit of Rs 23 crores. The net profit will rise to Rs 35 crores in the year 2016-2017. This will be due to the commissioning of the new facility. Dividend paid was Rs .7 per share which will rise to Re 1 per share.

Equity Holding:

Government holds about 40% , Public holds the rest 60% with Maruti Suzuki holding 13% and Denso holding 13% in the public category.

Comparisions to peers:

As of now Subros has no peers and does not have a direct competition in the listed space. It has a key customer in Maruti Suzuki. It is expanding into other horizons.

Investments Rationale:

The air condition market for 4 wheelers is in a very nascent stage and Subros is expanding in the air condition market for trucks and buses and is also going into other car brands apart from Maruti Suzuki which is a key customer. There is a possibility that government will make air conditioning of trucks mandatory so it will add huge prospects to the growing market.

Price Targets:

The current rate of Rs 81 per share is tipped to touch 100  in a time frame of 6 months and can achieve a target of Rs 120 in the next 1 year

( Disclosure: The analyst has no  holdings in the company, but has family holdings as on date of issue being published) Sebi  Registration No: INH000001717

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