Post on 23-Mar-2018
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CARE EQUITY RESEARCH OFFERS
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AMTEK AUTO LIMITED
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EQUIGRADE
EQUI-GRADE – Analytical Power for Investment Decisions
AMTEK AUTO LTD Auto Ancillaries
Very Good Fundamentals; Considerable Upside Potential CMP : Rs. 118 / CIV : Rs. 178 1
16 February 2011
CARE Equity Research assigns 4/5 on fundamental grade to Amtek Auto
Limited (AAL)
CARE Equity Research assigns fundamental grade of 4/5 to AAL. This
indicates „Very Good Fundamentals‟. AAL is the only Indian company
with integrated component manufacturing facilities across forging,
aluminum casting, machining and sub-assembly of auto and non-auto
components. AAL is the largest machining company and second largest
forging company in India, with diversified product and client mix. It holds
leadership position in some of the critical components like connecting
rods, fly-wheels, ring gears etc. amongst others.
However, it has to cope with the challenges of volatile demand from
cyclical automobile industry and volatile input costs, which currently are on
the rising trend. Foray into railway wagons and defence sector would help
AAL mitigate the risks of volatility in demand to some extent. CARE
Equity Research believes that AAL‟s foreign subsidiaries are a drag on it,
despite the worst being a matter of the past and situation improving for
them. The Amtek Group is the process of restructuring the promoter
holding, with AAL as its flagship company, but the final structure remains
uncertain as of now. There is also imminent dilution of the equity in the
short term on account of the same.
Valuation
CARE Equity Research assigns valuation grade of 5/5 to AAL based on the
current Intrinsic Value (CIV) of Rs. 178 arrived at by using a mix of DCF,
EV/EBITDA and P/E methodologies as against Current Market Price
(CMP) of 118, indicating „Considerable Upside Potential‟ from CMP.
Consolidated Financial Information Snapshot1
(Rs Crore) FY09 FY10 FY11 P FY12 P Operating Income 3,439 3,691 4,796 6,313 EBITDA 700 908 1,132 1,442 Ordinary PAT (After minority interest) 173 240 430 619 Fully Diluted EPS* (Rs.) 10.2 11.8 16.6 23.9 Dividend Per Share (Rs.) 0.5 1.0 2.1 3.1 P/E (times)
10.0 7.1 5.0
EV/EBITDA (times) 6.1 4.9 3.8 1 Year ending 30th June
* Calculated on Current Face Value of Rs. 2/- per share
AMTEK AUTO LIMITED
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EQUIGRADE
Strengthening domestic automobile sales to drive demand for automotive components
The growth in automotive components industry is mainly driven by the automobile sales. The period FY08 and
FY09 was challenging for the industry owing to liquidity crisis that hit the automobile sales. As major portion of
AAL‟s revenue is generated from sales to Original Equipments Manufacturers (OEMs), AAL‟s revenue also
dropped by around 26 per cent in FY09. Nevertheless, the strong recovery in automobile demand especially in the
domestic market enabled company to push up its revenue by around 7 per cent in FY10.
Automobile: Segment wise production
AAL: Growth trend in revenues
Source: CARE Equity Research, Society of Indian Automobile Manufacturers (SIAM), Tractor Manufacturer Association (TMA)
AAL‟s domestic operation was the key beneficiary of this strong growth momentum observed in automobile
industry and being Tier-I supplier delivering components directly to vehicle manufacturers, it is a direct proxy to
this automobile growth story. This was also evident as AAL‟s consolidated net revenue posted an impressive growth
of around 73 per cent in its first quarter ending September 2010, on the back of upbeat domestic automobile
demand.
Going forward, CARE Equity Research expects the domestic demand of automobile to remain robust given 1)
persistence of the economic buoyancy 2) increasing per capita income and 3) low vehicle penetration. According to
CARE Research, passenger cars segment is likely to show 13-14% annual growth in sales, whereas commercial
vehicle and two-wheeler segments are expected to grow at CAGR of about 9-10% in next 4-5 years period. Being a
major player domestic auto component space, AAL‟s domestic operations will continue to garner the benefits of
favourable industry scenario in short to medium term.
FUNDAMENTAL GRADE Very Good Fundamentals 4/5
Units (in mn) FY07 FY08 FY09 FY10 FY111
Passenger vehicles 1.5 1.8 1.8 2.4 2.1
Growth (%) 15% 20% 0% 33% 28%
Commercial vehicles 0.5 0.5 0.4 0.6 0.5
Growth (%) 25% 0% -20% 50% 41%
2/3 wheelers 9 8.5 8.9 11.1 10.4
Growth (%) 13% -6% 5% 25% 30%
Tractors 0.4 0.3 0.3 0.4 0.4
Growth (%) 33% -25% 0% 33% 22%
1 Production data for FY11 is for the period April - December 2010
-40%
-20%
0%
20%
40%
60%
0
1,000
2,000
3,000
4,000
5,000
FY07 FY08 FY09 FY10
Revenues (LHS) Growth (%)
Rs
(cro
re)
AMTEK AUTO LIMITED
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EQUIGRADE
Presence in all three segments casting, forging and machining enables process integration
AAL‟s presence in all the three segments – Casting, Forging and Machining enables the company to exist in entire
value chain of its product offerings though sophisticated technology is critical for manufacturing AAL‟s products for
engine, transmission, suspension & chassis. Also, the existence in all three segments enables effective cost control
through process integration which is detailed below:
i. The company enjoys diverse product offering components which are high technology , long life, and safety
components that are manufactured through casting and forging process.
ii. Machining involves processing of components manufactured through casting and forging as per the
specification of the buyers. This capability enables AAL to reap benefits through increased realisation
owing to high value addition combined with process integration and less wastages.
Snapshot of AAL‟s value chain
Source: CARE Equity Research
Global economic recovery to boost export potential
AAL‟s revenue mix is geographically diversified into Europe, U.S. and India. Share of direct exports in the total
revenue mix declined substantially from 37% in FY09 to merely 20% in FY10 on the back of difficult market
conditions especially in Europe.
However, going forward, CARE Equity Research believes that worst is over for the global automobile segment. The
global economy is projected to grow at healthy rates of 4.8% in 2010 and 4.2% in 2011, as per International
Monetary Fund (IMF) estimates. This growth, along with rising consumer confidence and easing levels of
Ingots,
BarsRaw materials
Casting Forging
Machining
End-
Users
Hot press &
Cold pressAluminium
OEMs &
Tier I suppliers
Aluminium
AMTEK AUTO LIMITED
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EQUIGRADE
unemployment, would boost automobile demand in export market. Indian component manufacturers would be
greatly benefited by this trend as they enjoy the advantages of cheap labour, availability of skilled manpower,
technological advancements and local access to raw materials like steel (including iron ore), aluminum (including
bauxite), natural rubber, plastics etc.
World GDP Growth Rates (in %)
Breakup of consolidated revenues (%)
Source: CARE Equity Research, Company and International Monetary Fund
AAL‟s business from European market that forms major portion of its overseas revenues continued to remain
under strain in 2010 as well due to subdued growth in the European automobile sales. Hence, the share of its
overseas subsidiaries in company‟s consolidated revenues has dropped considerably from 45 per cent in FY07 to
around 20 per cent in FY10. CARE Equity Research believes, AAL‟s large exposure to Europe market poses
concerns to its outlook, as European market is expected to show one of lowest economic growth rates in the world
in next two years.
Furthermore, the gradual phasing out of government-sponsored stimulation packages is likely to impact the
automobile demand in US and Europe, as CARE Equity Research expects the stimulus package induced volume
gains to taper off shortly, keeping demand under pressure in 2011. Under such scenario, it is becoming imperative
for AAL‟s to diversify its exports to high growth regions such as Asia, Africa and South America.
2008 2009 2010(F) 2011(F)
World 2.8 –0.6 4.8 4.2
US 0.0 –2.6 2.6 2.3
Europe 0.5 –4.1 1.7 1.5
Middle East and North Africa 5.0 2.0 4.1 5.1
Sub-Saharan Africa 5.5 2.6 5.0 5.5
South America 4.3 –1.7 5.7 4.0
Rest-of-North America
Canada 0.5 –2.5 3.1 2.7
Mexico 1.5 –6.5 5.0 3.9
Developing Asia 7.7 6.9 9.4 8.4
China 9.6 9.1 10.5 9.6
India 6.4 5.7 9.7 8.4
45% 49%37%
20%
55% 51%63%
80%
0%
20%
40%
60%
80%
100%
FY07 FY08 FY09 FY10
Overseas subsidiaries Domestic operations
AMTEK AUTO LIMITED
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EQUIGRADE
Global Automobile Incentives Plans
Source: CARE Equity Research
Large integrated capacities with proven quality standards to benefit AAL
Relationship between OEMs and component suppliers has seen two distinct trends in last few years that are
expected to benefit AAL:
Preference for financial strength: Global component suppliers have witnessed challenging business
environment in late-2008 and 2009. Several leading players filed for bankruptcy citing reasons including
rising material costs, decreasing demand and tightening liquidity situation. These bankruptcy proceedings
also affected OEMs in various ways such as delayed/cancelled supplies, legal proceedings, compulsion to
renew contract at higher prices etc. Hence, OEMs have started emphasizing on sourcing components from
Country Incentive to public End Date Program
North America
US $4500 Aug-2009 The Car Allowance Rebate System (CARS)
Canada C$300"Retire Your Ride” program: Scrap vehicles
manufactured before 1996.
Europe
FranceSubsidy- €1,000;
Tax rebate- up to €5,000 Dec-2009
Scrapped vehicles more than 10 years old for more
fuel efficient vehicles.
Germany €2,500 subsidy Sep-2009 Scrap vehicles more than 9 years old.
Italy
Basic incentive - €1,500
Plus - addn. €5,000 non-
pollution incentive
Dec-2009Scrap vehicles more than 9 years old and buy less
polluting newer ones.
Spain€2,000 and interest free
loansOct-2009 Scrap vehicles more than 10 years old.
United Kingdom £2,000 Feb-2010
“Scrappage grant”: Scrap a car/van older than 10 years
old. The cost to be shared equally between
manufacturer and the UK government.
Asia
Japan ¥250,000 Sep-2010Fleet modernization program: Scrap vehicle older
than 13 years
China
Sales Tax for small cars
slashed to half; Rebate of
$450-900
May-2010
Sales taxes for small cars slashed to half.
Rebate for older vehicles with poor emissions
Special incentives for farmers to buy cars
South Korea 2.5 million Won Dec-2009Tax incentive program: Slashing taxes for vehicles
made before 1999
AMTEK AUTO LIMITED
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EQUIGRADE
financially healthy suppliers that can become reliable long-term partners. CARE Ratings has reaffirmed
„CARE AA‟ (Double A) to long-term bank facilities of AAL in August 2010, which is “considered to offer
high safety for timely servicing of debt obligations”.
Technological collaborations: Stringent emission norms along with rising competition in the market have
compelled OEMs to be more open towards technological collaborations with component suppliers. AAL is
likely to be one of the key beneficiaries of this trend as it is the only Indian company to have integrated
component-manufacturing facilities across forging, casting (Aluminum), machining and sub-assemblies.
Furthermore, in-house design and product development facilities would help AAL in consolidating its
position as stable and low cost partner.
Wide product range and diversified customer base reduces concentration risk …
Amtek group has a wide product range including automotive components such as cylinder blocks/heads,
crankshafts, front axle beams, connecting rods, flywheels, ring gears, knuckles and non-automotive products for
railway components. Furthermore, the company has also diversified its customer base with no customer
contributing more than 15 per cent to its revenue. However, as more than 80 per cent of the consolidated revenues
are generated from the auto component business, company‟s growth is greatly influenced by the volatile demand
from cyclical automobile industry.
…however, increasing focus on non-automotive segment a positive step forward
Non-automotive business contributed about 18 per cent of the group‟s consolidated revenue in FY10. The
company is aiming to increase the share of non-auto segment to 25 per cent of total revenue in next 4 years. CARE
Equity Research views increasing focus on non-automotive segment positively, as it would not only lead to greater
diversification and better returns of its business but also will provide cushion against the cyclical automobile
demand.
Railway wagon segment: growth opportunity but task uphill
AAL has entered into a joint venture (JV) with American Railcar Industries (USA) to set up a railway wagon
manufacturing facility near Chandigarh. The Government of India (GOI) has rolled out aggressive plans to procure
33,909 wagons till FY12 and around 2,55,227 wagon through FY13-20 period. Hence at a price of Rs 30 lacs per
wagon, the total purchases would aggregates to around Rs10,173 crore till FY12.
AMTEK AUTO LIMITED
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EQUIGRADE
However, AAL is relatively new player in this industry. Factors like strict pre-qualification norms by the government
agencies and large size of orders are likely to favor other pre-established players like Texmaco, Titagarh Wagons,
Hindusthan Engineering and Industries, Cimmco Ltd, Modern Industries. Hence to make major inroads in this
industry would be a challenge for the company.
Indian Railways: Wagon Purchasing Plan
Source: CARE Equity Research and Indian Railways
Specialty segment: Opportunities lies in as outsourcing agent
AAL has recently formed a JV with specialized vehicle manufacturer Autech Corporation of South Korea for
manufacturing specialized vehicles like ambulances, fire tenders, refrigerated and logistics vehicles. India‟s defence
spend has increased massively from a merely $35 million in FY1951 to $31 billion in FY10. About 40% of this
spend on equipment modernization. The sourcing pattern for Indian defence sector has largely been dominated by
public sector undertakings or large corporate such as the Tata Group, Mahindra Group, Kirloskar Brothers and
L&T group due to large capital investment and substantial R&D spend. Role of private sector has been still at
nascent stage, primarily catering to raw materials and components requirements of PSUs or large private sector
players. Going forward, the revised procurement policy of „Buy and Make (Indian)‟ is expected to encourage
participation of private players in specialty market, extent of which is unclear at this stage, in our view.
AMTEK AUTO LIMITED
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EQUIGRADE
CARE Equity Research values AAL at Rs. 178 per share
According to CARE Equity Research, the Current Intrinsic Value (CIV) of AAL stands at Rs. 178 per share. This
translates into Enterprise Value (EV) of Rs. 6,963 crore. Thus, the equity shares of AAL have „Considerable
Upside Potential‟ from the current market price (CMP) of Rs 118 per share.
The CIV is arrived based on combination of Discounted Cash Flow (DCF), P/E and EV/EBITDA
methodologies
The CIV is arrived based on combination of DCF, P/E and EV/EBITDA methodologies. CARE Equity Research
has arrived at CIV of the stock by taking average of fair value arrived at by using DCF as well as forward
EV/EBITDA multiple and forward P/E multiple.
AAL: Target Price Summary
Source: CARE Equity Research
Discounted Cash Flow
The overall firm Weighted Average Cost of Capital (WACC) is calculated based on our long term
assumptions of cost of financing summarized in below table.
CARE Equity Research has used Free Cash Flow (FCF) methodology to arrive at the firm value. The
forecasted FCF is as per CARE Equity Research estimates.
Terminal value is arrived at by using Gordon Growth Model. CARE Equity Research has assumed that in
the long-run, AAL capital expenditure shall be equal to its depreciation charge. The estimated terminal
value forms about 66% of the firm‟s total equity value, which appears to be reasonable.
VALUATION GRADE Considerable Upside Potential 5/5
Sr No. Methodology Fair Value
(Rs/share)
1 Discounted Cash Flow (DCF) basis 156
2 EV/EBITDA basis 188
3 P/E basis 191
Current Intrinsic Value (CIV) 178
AMTEK AUTO LIMITED
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EQUIGRADE
AAL: Valuation Based on Discounted Cash Flows
Source: CARE Equity Research
AAL: Dilution of equity base
Note: Warrants are proposed to be issued to the promoters at conversion price of Rs. 180 per share
Source: CARE Equity Research
Item Value Basis
Risk Free Rate 8.25% 10 year G-sec yield expected at year end FY11
Equity Risk Premium 6.00%
Beta 1.03
Cost of Equity 14.41%
Cost of Debt 9.00% Long term cost of debt
Tax Rate 33.00% Long term tax rate
D/E Ratio 0.50 Long term target D/E ratio
WACC 11.61%
Terminal growth rate 3.00%
(Rs crore except per share data)
2010-11 2011-12 2012-13 2013-14 2014-15
PAT 430 619 980 1,542 1,823
Depreciation 327 336 345 354 363
Interest (1-T) 156 190 170 135 102
Capex -200 -200 -200 -200 -200
Increase in WC -413 -483 -438 -793 -1,302
Free Cash Flow 299 462 856 1,037 785
Discount Rate 0.95 0.85 0.76 0.68 0.61
PV of FCF 283 391 649 705 478
PV of Terminal Value 4,529
Total Discounted Value of Firm 7,035
Less: Net Debt (FY10) 2,984
Present Value of Equity 4,051
No of Equity Shares (crore) 26
Per Share 156
No. of Shares Crore
Fully Diluted - Sep'10
23.52
Add: Warrants: FY11
0.75
Add: Warrants: FY12
1.65
Total Diluted Equity Base 25.92
AMTEK AUTO LIMITED
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EQUIGRADE
EV/EBITDA basis
The stock is currently trading at EV/EBITDA of 4.1x our FY12 EBITDA estimates. Similarly, the current market
price is reflecting P/E of 5.6x on our FY12 EPS estimates. CARE Equity Research have estimated fair value of the
stock using EV/EBITDA of 5.0x our FY12 EBITDA earnings estimate, which is close to the upper band of AAL‟s
historic trading average. CARE Equity Research believes that the stock deserves upper band of valuation given that
the recent capacity expansion plans would start yielding benefits to the company post FY11.
AAL: Fair Value Estimation using EV/EBITDA
Multiple Method AAL: Implied P/E Calculation based on Fair
Value
Source: CARE Equity Research
AAL: Sensitivity Analysis – Share price
Source: CARE Equity Research
EV / EBITDA Basis
EBITDA FY 12 (Rs. Cr.) 1,442
EV/EBITDA Multiple assigned 5.0
EV (Rs. Cr) 7,211
Less: Net Debt FY 12 (Rs. Cr.) 2,336
Equity Value (Rs. Cr.) 4,875
Diluted No. of shares (Cr.) 26
Per Share 188
P / E Basis
Fully diluted EPS FY12 P 24
P/E Multiple assigned 8
Per Share 191
Weighted Average Cost of Capital (%)
10.0% 10.5% 11.1% 11.5% 12.0%
Term
inal
Year
Gro
wth
Rat
e (
%)
2.0% 182 176 171 167 163
2.5% 187 180 175 170 166
3.0% 192 185 178 174 169
3.5% 198 191 183 178 172
4.0% 206 197 188 182 176
AMTEK AUTO LIMITED
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EQUIGRADE
Company Overview
AAL is one of the flagship companies of the Amtek Group. The company was incorporated by Mr. Arvind Dham,
late Mr. W. L. Dham and Haryana State Industrial Development Corporation (HSIDC) in 1985. The company is
currently one of the leading integrated manufacturers of automotive components with operations across forging,
aluminium casting, machining and sub-assembly of auto and non-auto components. The company is headquartered
in New Delhi with few of its domestic manufacturing units at Gurgaon, Dharuhera, Bhopal, Pune, Sohna etc. Apart
from automotive segment, the company is also active in non-auto segment like defence, aerospace, specialized
vehicles, locomotive components and railway wagons. Over the years, AAL has acquired a mix of domestic and
international companies in order to strengthen its manufacturing and technical capabilities.
Organization Chart
As on 31st January 2011
Source : Company and CARE Equity Research
COMPANY BACKGROUND
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Business Mix
Amtek group has diversified revenue stream consisting of passenger cars, light commercial vehicles (LCV), heavy
commercial vehicles (HCV), 2-3 wheelers, tractors and non-auto segment. The passenger cars segment contributes
about 62% of group‟s total revenue followed by LCV/HCV and 2-3 wheelers segments contributing 11% and 9%
respectively. The non-auto segment currently contributes about 18% to total revenue mix. However, with significant
investments planned towards exploring new sectors such as railways, defence, off-highways, specialized vehicles and
aerospace the group is aiming to increase share of non-auto segment to 25% by FY14.
Customer Group-wise Revenue Break-up (FY10) Segment-wise Revenue Break-up (FY10)
Source : CARE Equity Research
AAL: Product Portfolio
Source : CARE Equity Research
62%
40%
18%
22%
11%
26%
9% 12%
0%
20%
40%
60%
80%
100%
Global Domestic
Passenger Cars Non-Auto
LCV/HCV 2/3 Wheelers
57%49%
24%28%
12% 20%
7% 3%
0%
20%
40%
60%
80%
100%
Global Domestic
Machining/Assemblies Forgings
Iron Castings Aluminium Castings
ForgingAluminium
Casting
Machining and
Sub-AssemblyNon-Auto
Connecting Rod Intake Manifold Turbocharger Railway Wagons
FA Beams Clutch Case Connecting RodLocomotive
Components
Crankshaft SumpCorner Module
AssemblySpecialty Vehicles
Camshaft Cover Cylinder BlocksAerospace
components
Bridge Fork Bottom Transmission CaseRing gear, Flywheels
& Ladder frames
Product Portfolio
AMTEK AUTO LIMITED
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EQUIGRADE
Export Business
AAL: Geographic Break-down of Revenues (%)
Source : CARE Equity Research
Promoters & Management
During first quarter of FY10, AAL‟s attempt to merge five group entities including Amtek India was foiled when
High Court of Punjab and Haryana dismissed the plan on account of change in valuation of shares and drop in
turnover and profits, since the scheme was proposed on the basis of valuation as of 2007. Thereafter, the
management planned to consolidate promoter holdings in the group companies like Amtek India and Ahmednagar
Forgings and bring under the umbrella of AAL that would become flagship company. However, the final group
structure remains uncertain as of now and concerns about imminent dilution of the equity in the short term on
account of the same are key monitorables.
2008-09 2009-10
India,
63%
Europe
, 35%
USA,
2%
India,
80%
Europe
, 19%
USA,
1%
Name Designation Education Brief Profile
Mr. Arvind DhamChairman &
DirectorM. Arch.
He has notable experience establishing new projects in automotive segment.
Mr. Dham has also received "Udyog Patra" award from the Indian
government in 1992.
Mr. Deshpal Singh
Malik
Managing
DirectorB.E. (Mech.)
He has over three decades of experience in automobile industry. Mr. Malik
has previously worked in automotive companies like Eicher, Escorts, DCM
and Piaggio.
Mr. Rajeev Thakur DirectorMarine
EngineerHe vast experience in the field of management consultancy.
Mr. Sanjay Chhabra DirectorHe has notable experience in the field of technical, marketing and
project implementation
Mr. Bahushrut
LuganiDirector C.A.
He has diversified experience spanning over 25 years in the field of accounts,
consultancy, taxation, establishing new projects etc.
Mr. B. Venugopal Director He is a nominee director of LIC with effect from May-2009.
Mr. John Ernest
FlinthamDirector
H.N.B. in
Mech.
Engineering
He has notable experience in manufacturing and commercial sales of
automotive components.
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Indian Auto component Industry
The auto component industry is ancillary to the automobile industry. Nevertheless, the size of global auto
component industry is as large as the automobile industry itself. The industry not only caters to the Original
Equipment Manufacturers OEM) but also to the existing huge automobile population or fleet in the replacement
market. The global auto component industry is estimated at around US$ 1.5 trillion in 2009.
The Indian auto component industry is estimated at around Rs.1,280 billion (US$ 27 billion) in 2009-10. Our
industry has the resources to manufacture the entire range of components required for vehicle manufacturing,
approximating 20,000 components. The domestic market is estimated at Rs.1,060 billion (US$ 22 billion), while
Rs.220 billion (US$ 5 billion) worth auto components were exported in 2009-10. The OEM market is estimated at
Rs.700 billion (US$ 15 billion), whereas the replacement market is estimated at Rs.360 billion (US$ 8 billion).
While the indigenous manufacturers catered Rs.740 billion worth domestic market, Rs.320 billion worth
components were imported in 2009-10.
The auto component industry can be segregated into engine components, drive transmission and steering
components, body and chassis parts, suspension and braking parts, equipments, electrical components and other
sheet metal parts.
Component-wise market segmentation
Source: ACMA
SNAPSHOT OF THE INDUSTRY
31%
19%12%
12%
10%
9%7%
Engine Components
Drive Transmission
and Steering
Body and Chassis
Suspension and
Braking Components
Equipments
Electrical Components
Others
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Domestic market offers huge potential
India is one of the fastest growing automobile market in the world. Rise in the income levels and easy liquidity
scenario is enabling healthy growth in automobile sales in last one decade. The auto component industry has also
been able to reap the benefit of this rise. CARE Research foresees strong economic scenario would continue to
push automobile demand northwards resulting in healthy growth in auto component industry as well. During the
next five years (FY10-FY15) the domestic auto component industry is expected to grow at a Compounded Annual
Growth Rate (CAGR) of 20-21 per cent from Rs.1,060 billion in 2009-10 to Rs.2,700 billion in 2014-15. Original
Equipment Manufacturer (OEM) segment would drive the growth, with healthy automobile production foreseen
going forward. The replacement demand too would remain healthy on account of persistent and significant addition
to the existing automobile fleet.
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Income Statement
(Rs Crore) FY08 FY09 FY10 FY11 P FY12 P
Operating Income 4,657 3,439 3,691 4,796 6,313
EBITDA 960 700 908 1,132 1,442
Depreciation and amortisation 210 273 310 327 336
EBIT 750 427 598 805 1,107
Interest 116 152 205 233 284
PBT 634 275 392 573 823
Ordinary PAT (After minority interest) 386 173 269 430 619
PAT (After minority interest) 427 173 240 430 619
Fully Diluted Earnings Per Share* (Rs.) 21.5 10.2 11.8 16.6 23.9
Dividend 12 11 29 55 80
* Calculated based on ordinary PAT on Current Face Value of Rs. 2/- per share
Balance Sheet
(Rs Crore) FY08 FY09 FY10 FY11 P FY12 P
Net worth (incl. Minority Interest) 3,094 3,076 4,471 4,887 5,434
Debt 2,899 3,898 3,809 3,988 3,788
Capital Employed 5,993 6,974 8,279 8,874 9,222
Net Fixed Assets 4,035 4,908 5,446 5,318 5,183
Investments & Others 62 49 281 590 590
Loans and Advances 443 1,016 1,074 654 594
Inventory 721 755 812 1,051 1,384
Receivables 823 522 641 788 1,038
Cash and Cash Equivalents 1,037 798 825 1,227 1,452
Current Assets, Loans and Advances 3,029 3,092 3,356 3,720 4,467
Less: Current Liabilities and Provisions 1,133 1,075 803 754 1,018
Total Assets 5,993 6,974 8,279 8,874 9,222
The financial year ending of AAL is 30th June every year
FINANCIAL STATISTICS
AMTEK AUTO LIMITED
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EQUIGRADE
Ratios
FY08 FY09 FY10 FY11 P FY12 P
Growth in Operating Income 25.2% -26.2% 7.3% 29.9% 31.6%
Growth in EBITDA 19.1% -27.0% 29.3% 25.0% 27.4%
Growth in PAT 4.6% -59.6% 39.2% 78.6% 44.1%
Growth in EPS -17.8% -52.4% 15.6% 40.3% 44.1%
EBITDA Margin 20.6% 20.4% 24.5% 23.6% 22.8%
PAT Margin 9.2% 5.0% 6.5% 9.0% 9.8%
RoCE 15.0% 6.6% 7.8% 9.4% 12.2%
RoE 16.2% 5.6% 6.4% 9.2% 12.0%
Net Debt-Equity (times) 0.6 1.0 0.7 0.6 0.4
Interest Coverage (times) 8.3 4.6 4.4 4.9 5.1
Current Ratio (times) 2.7 2.9 4.2 4.9 4.4
Inventory Days 56 80 80 80 80
Receivable Days 64 55 63 60 60
Price / Earnings (P/E) Ratio 10.0 7.1 5.0
Price / Book Value(P/BV) Ratio
0.6 0.6 0.5
Enterprise Value (EV)/EBITDA 6.1 4.9 3.8
Source: Company, CARE Equity Research
AMTEK AUTO LIMITED
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EQUIGRADE
CARE Equigrade Grid (CEG)
Through CEG, CARE Equity Research addresses two critical factors considered by an investor while investing in a
particular company‟s equity shares:
1. Fundamentals: Whether the company is fundamentally sound with respect to its business, its financial position, its
management and its prospects.
2. Valuation: What is the Current Intrinsic Value (CIV) of the stock and how it compares vis-a-vis its Current
Market Price (CMP)
These factors are answered assigning quantitative grades to both these parameters. CEG is the snapshot of
„Fundamental Grade‟ and „Valuation Grade‟ assigned by CARE Equity Research.
Fundamental Grade
This grade represents how sound the company is fundamentally, vis-à-vis other listed companies in India. This grade
captures:
1. Business Fundamentals and Prospects
2. Financial Soundness
3. Management Quality
4. Corporate Governance Practices
The grade is assigned on a five-point scale as under:
CARE Fundamental Grade Evaluation
5/5 Strong Fundamentals
4/5 Very Good Fundamentals
3/5 Good Fundamentals
2/5 Modest Fundamentals
1/5 Weak Fundamentals
EXPLANATION OF GRADES
AMTEK AUTO LIMITED
19 www.careratings.com
EQUIGRADE
Valuation Grade
This grade represents the potential value in the company‟s equity share for the investor over a 1 year period. The
Current Intrinsic Value (CIV) or the price arrived by CARE Equity Research on fundamental basis is compared with
the current market price (CMP) of the stock and the grade is assigned based on the gap between CIV and CMP of the
stock.
The grade is assigned on a five-point scale as under:
CARE Valuation Grade Evaluation
5/5 Considerable Upside Potential
(>25% from CMP)
4/5 Moderate Upside Potential
(10-25% from CMP)
3/5 Fairly Priced
(+/- 10% from CMP)
2/5 Moderate Downside Potential
(Negative 10-25 from CMP)
1/5 Considerable Downside Potential
(<25% from CMP)
Grading determination is a matter of experienced and holistic judgment, based on relevant quantitative and qualitative factors of
the company in relation to other listed companies.
DISCLOSURES
Each member of the team involved in the preparation of this grading report, hereby affirms that there exists no conflict of interest
that can bias the grading recommendation of the company.
This report has been sponsored by the company.
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AMTEK AUTO LIMITED
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EQUIGRADE
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