Enkei – A good value pick

Enkei Castalloy Ltd.

Looks to be a very good value pick. This is a Pune based company engaged in manufacture of gravity and low pressure aluminum die casting. Its a joint venture between the Enkei Corporation of Japan and Rai & Associates.

The company manufactures a range aluminum castings used in the automobile industry. I am also guessing the company would soon start manufacture and sales of alloy wheels for cars & two wheelers. The company boasts a list marquee names as its customers.

Finer details:

  1. India has a growing automobile market. More and more manufacturers are moving towards aluminum engines. Thus the company has a good potential market to grow.
  2. The Indian & Foreign promoters together hold about 72% stake in the company, which indicates promoters confidence in the company.
  3. The company made a net loss for the FY 09-10 & has done a turn around in FY 09-10.
  4. This a small cap company with a total market cap of Rs.120 Cr.
  5. I believe the company should end the top line with ~Rs.240 Cr for FY 10-11 and an EPS of ~Rs.14

Overall looking at the company’s growth prospects and a PE ratio of 12, I believe a 1 year target for this scrip would be 168/-. This is a 46% return on investment at an average buy price of Rs.115/-.

Recommendation: Buy
Target: Rs.168

Important links:

Company’s website.
Company’s financials.


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