Financial Daily from THE HINDU group of publications
Sunday, Apr 14, 2002

Investment World
Features
Stocks
Port Info
Archives

Group Sites

Investment World - Stocks


Swaraj Mazda: Hold

S. Muralidhar

SWARAJ Mazda Ltd (SML), the third largest player in the light commercial vehicles (LCV) market, has been steadily climbing out of a slow growth spiral for the past three years. The just ended financial year could see the company closing its books with one of the best performances all round in recent years.

SML is expected to report a 22 per cent increase in volumes sales during 2001-02.

From a total of 5,070 vehicles sold in the previous year, SML sold over 6,170 vehicles in the just ended fiscal — 31 per cent of which was sold in the quarter ended March 2002.

The company is also said to have exported about 350 LCVs during the year, compared to exports of about 225 vehicles in 2000-01.

For the nine months period ended December 2001, the company reported operating revenues of Rs 198.74 crore and a net profit of Rs 3.50 crore.

Given the surge in sales in the fourth quarter of 2001-02, it can be safely estimated that for 2001-02, the net profit is likely to be about Rs 5-5.25 crore, representing an increase of over 25 per cent from the previous year's net profit of Rs 3.99 crore.

The per share earnings would then be Rs 5-5.25. The stock is now trading at multiple of 10 times the expected earnings for the year. Shareholders of SML can continue to hold the stock at the current level of Rs 55 and pare exposures after the disclosure of performance for the quarter ended March 2002.

Industry sources estimate that the total LCV market would have shrunk from about 52,000 units in 2000-01 to about 45,000 units in 2001-02.

Of the major LCV manufacturers, only two reported a jump in sales — SML and Eicher Motors Ltd. Again, of these two, SML's growth in sales is the most impressive. In contrast, industry leader, Tata Engineering, recorded an over 20 per cent fall in domestic sales volumes during the year under review.

SML was one of the early entrants into the LCV market, but with its traditional emphasis on orders from the Government and the armed forces, the company was unable to create a strong foothold for itself in the industry. Further, with competition from Ashok Leyland's Iveco range of LCVs and from Eicher Motors, the market has witnessed a certain level of saturation in this segment.

Now, SML is planning to shift its focus from Government and emphasise on the retail and institutional segment of the LCV market.

To this end, the company is proposing to overhaul its marketing network, particularly in the South.

The company is also planning to increase production capacity at its Punjab plant to 8,000 vehicles on a single shift basis later this year. It is currently working at capacity level of about 6,500 units per annum on a single shift basis. By 2003-04, SML hopes to raise the capacity to15,000 vehicles per annum on a double shift basis.

SML continues to service the Government's requirements and the armed forces. Company officials say that orders from the Government will be sustained during the next few years.

Send this article to Friends by E-Mail

Stories in this Section
Tea — pale and watery


Tea: Positive policy changes
So, what's for tea?
Coffee: Brewing still
`We want to deliver a better mix' -- — Mr P. T. Siganporia, Deputy Managing Director, Tata Tea
Uneven tax field for domestic manufacture
Mastershare 86: Hold/Avoid fresh exposures
Sundaram Bond Saver: Invest
UTI Services Fund: Cut exposures and book profits
Pioneer ITI FMCG: Pare exposures
MIP '97: Take cash, avoid rollover
Focussing on theme funds
Warrants from UTI
Wockhardt: Buy
Infosys: Sell now and buy at lower levels
MphasiS BFL: Sell/Buy on declines
Unichem Lab: Book profits early
Swaraj Mazda: Hold
TNPL: Hold
US tightens visa rules
Transit visa on Air France
Medium-size software companies -- Exaggerated valuations
Frontline software companies -- Lessons from the returns
Endowment assurance policies -- Rest assured, with caution
Techs keep Sensex in positive zone
IPCL moves up on divestment hopes
Positive trend in Sterlite Optical
Nasdaq at crucial juncture
Bonds carry downside bias
Volumes decline on bourses
Interest wanes on index puts
Reliance Industries remains active
Options help guide
Futures guide
Revolve with Amex
Krishna Bhagya Jala Nigam: Invest (Medium-to-high risk)
TVS Srichakra: On a smooth ride
Income received outside India
Two-wheeler market: Gathering speed
UTI's assured return schemes -- Hardly reassuring?
Investing abroad: Sensible restriction on mutual funds
Does investing abroad generate higher returns?
It Adds Up!


The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |

Copyright 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line