Munjal Auto Industries Ltd- a multi-bagger Value Pick to bet on

Background 

-Munjal Auto Industries Ltd., (MAIL) promoted by Munjals(Hero group) is a TS 16949 and ISO 14001 accredited, leading auto component manufacturing company in India producing Exhaust systems complete for two wheelers and four wheelers, Spoke rims for two wheelers, Steel Wheel Rims for Two Wheelers and Four Wheelers, Fuel Tanks for Four wheelers, Seat Frames for four wheelers and other automotive assemblies.

-Technical collaboration with Samsung Industries Ltd. of Korea for the manufacture of Fuel Tanks for Four Wheelers. 

-The largest manufacturer of the exhaust systems in the world, manufacturing close to 22,000 systems per day. Besides the company produces more than 10,000 spoke rims for motorcycles and steel wheel rims every day.

Major Clients

Tata Motors limited

Tata Johnson Controls Automative Limited

Piaggio Vehicles

General Motors India

Hero Motocorp limited

Suzlon

Risks/Threats

-Hero Motors contributes maximum to the revenue,one customer concentration

-Fuel price increase has an adverse impact in automobile industry,it's a concurrent feature in india barring last 10 months when internationally oil is down.

-Environment Regulations

-Increase in the price of raw materials — nickel, paints, steel, etc.

-Fierce competition from organised and unorganised players in the auto ancillary sector.

Positives

-Strong Experienced Management support 

-continuous research and development 

-very wide product range which includes both for two wheeler and four wheeler.

-largest exhaust systems manufacturer

-Healthy dividend payout

-Good free Cash Flows

-debt is reduced 

RECOMMENDATION

At current market price of 75,the company looks really attractive and under valued.Its highly recommended at this price.