SML Isuzu - Ride it for Medium Term

“SML ISUZU Limited manufactures and sells light commercial vehicles for goods and passenger applications in India. Swaraj Mazda, incorporated in 1983 as Swaraj Vehicles, is engaged in manufacturing of vehicles for goods and passenger applications. In 1984 the company entered in a joint venture with Punjab Tractors, Mazda Motor Corporation and Sumitomo Corporation, Japan for the manufacture of light commercial vehicles (LCVs). Thus the name of the company was changed to Swaraj Mazda. Recently the company name changed to SML ISUZU Limited early name was Swaraj Mazda Limited on January 4, 2011. SML ISUZU Limited was founded in 1983 and is based in Chandigarh, India. SML ISUZU Limited operates as a subsidiary of Sumitomo Corporation. Company manufactures a range of vehicles such as trucks, buses and ambulances. The company has launched products like 4WD, Samrat, Sartaj, Dual Cab, Supreme-8 tonner, Truck- Super 12, Super ALFD and many more. In 1992, the company has supplied 500 trucks to the defence. Over the years it has built up a wide product portfolio covering regular as well as niche segment needs. The company exports its products to various countries like Bangladesh, Kenya, Tanzania, Nepal, Zambia, Ghana, Ivory Coast, Rwanda, Seychelles Syria and Jordan.”

“SML ISUZU Limited manufactures and sells light commercial vehicles for goods and passenger applications in India, reported its financial results for the quarter ended 30th June, 2015. The first quarter witnesses a healthy increase in overall sales as well as profitability of the company. The company’s net profit jumps to Rs.29 Cr  against Rs.23 Cr in the corresponding quarter ending of previous year, an increase of 26%. Revenue for the quarter rose 13% to Rs.381Cr from Rs.336Cr, when compared with the prior year period. Reported earnings per share of the company stood at Rs.20 a share during the quarter, registering 25% increase over previous year period. Profit before interest, depreciation and tax is Rs 35 CR as against Rs.26 Cr in the corresponding period of the previous year.”

“At the current market price of Rs 1140, the stock P/E ratio is at 38.82 x FY15E. Net Sales and PAT of the company are expected to grow at a CAGR of 25% and 16% over 2015 to 2016E respectively. 

 We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. 

We recommend ‘BUY’ in this particular scrip with a target price of Rs 1721 for medium to long term investment

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