Precision Camshafts
Precision Pipes And Profiles company is entering the capital market on 17th December 07, with a public issue of R.75 crores for equity shares of Rs.10 each in the band of Rs.140 to Rs.150 per share.
The company is into manufacturing automobile sealing systems and exterior products which includes weather strips, trim door opening, windshield molding, roof molding, quarter seal etc. having five manufacturing facilities located in New Delhi and Noida with total installed capacity of 47.50 lakh kg. per annum. The company is OEM supplier to automobile industry which includes Maruti Udyog, Honda SIEL, General Motors and Toyota Kirloskar with over 90% turnover coming from automobile while 5% from white goods industry and remaining 5% from electrical and construction.
The financial performance of the company has been on a rise, year on year with improvement in EBITDA margin as well. For FY 07 the total income was at Rs.109.29 crores with EBITDA of Rs.27.89 crores, resulting in a margin of 25.85% with PBT of Rs.21.24 crores and PAT of Rs.13.88 crores. This translated into an EPS of Rs.15.40 on equity of Rs.9 crores. For quarter ending June 07, the total income was at Rs.30.20 crores with EBITDA of Rs.9.31 crores, translating into a margin of 30.80%. This has shown a 4.95% rise over FY 07. Extrapolating the same trend for FY 08, topline should exceed Rs.130 crore with PAT of close to Rs.22 crores resulting in an EPS of close to Rs.25, on pre-IPO equity of Rs.9 crores.
The company has been operating almost at its rated capacity and hence is going in for an expansion in capacity which would get raised to 112.64 crore kg by FY 10. The in-house tool manufacturing and designing capacity is also being raised, which is critical for the operations of the company. The total cost is estimated at Rs.106 crores which is being partly financed by term loan of Rs.25 crores and Rs.75 crores from proposed issue, while rest being mobilized from internal accruals.
The company is broadly termed as auto ancillary company which are presently discounted by about 10 - 12 times. Since EPS of the company for FY 08 is expected to be Rs.25 on the pre-IPO equity, it would be, about Rs.16 on post IPO equity of Rs.14 crores. 50 lakh equity shares are likely to get issued, presuming issue at the upper band of Rs.150.
However, capacity expansions would keep happening in phases, every year, with capacity rising to 70 lakh kg. by FY 08 and 91.48 lakh kg. by FY 09. This would keep showing regular growth in topline and bottomline of the company. Hence, issue at Rs.150, at the upper band, is attractive and hence investment is advised.