Hope you are doing well.
Recently, I came across a stock by the name of Magna Electro Castings. The last 5-6 years numbers of the company looked good and the valuations reasonable.
The company is engaged in the manufacturing of ductile and grey iron castings in the weight range of 300 grams to maximum of 2000 kilograms.
Below, we have shared notes from the Jan'23 CARE credit report of the company. Hope you find the details useful in your search of investment opportunities.
Before that, a few days back we released our New Stock Recommendation for Alpha and Alpha + Members
It's a minerals processing company, largest in its segment, has captive raw material sources, grown PAT by ~300% in the last few years, de-leveraging balance sheet, 2nd generation promoters and available at around ~7 times post-tax earnings
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Magna Electro Castings - Notes from Jan'23 CARE credit rating report
- MECL was promoted in 1990 by N. Krishna Samaraj, an Engineer and Management graduate by qualification. He has more than two decades of business experience in the casting industry. He is the ex-president of “The Institute of Indian Foundry men” and currently takes care of the overall management of the company
- Business - MECL is engaged in the business of manufacturing & supplying ductile and grey iron castings in the weight range of 300 grams to maximum of 2000 kilograms
- MECL also produces fully-machined components utilizing its in-house CNC machine shop and other facilities as well
- Customers - The company caters to different sectors, such as automotive, locomotive, windmill, transmission, valves industries with no sector contributing to more than 20% of the revenue
- In automobiles, the company mainly supplies to tractor manufacturing companies. MECL also has niche products, such as complicated fabricating, prototyping, machining, and heat treatment
- The company caters to both domestic and export markets with export sales contributing to 55% in FY22 (PY: 49%)
- Energy needs - The company has windmills with aggregate capacity of 4 MW for captive consumption purposes and met 70% of the power requirement of the unit during the year
- Capacity - As on March 31, 2022, MECL had an installed capacity of 12000 MT for production of ductile iron castings
- The capacity utilization levels have been moderate in the range of 55% to 65% for the past three years ended FY22
- The company’s manufacturing facility, spread over 10 acres of land has in-house facilities, such as metal handling, molding, melting, sand plant, heat treatment, finishing, core shop, testing facilities and packing
- Raw material - The primary raw materials used for the ductile iron casting include steel scrap and ferro alloys, whose prices are inherently volatile and driven largely by global as well as local demand and supply conditions
- The prices of steel scrap have shot up by almost 50% in Q4FY22 leading to a pressure on the company’s margins
- Debt free - The liquidity of the company is adequate with NIL long-term debt repayments against accruals of ₹11.94 crore in FY22 and free cash balance of ₹14.43 crore as on March 31, 2022
- Receivable days - The company gives a credit period of 60-75 days to its foreign clients while it gives a credit period of around 60 days to its domestic customers
Disclaimer: This is not a recommendation to buy/sell Magna Electro Castings. The securities quoted are for illustration only and are not recommendatory.
SEBI Research Analyst Registration No. INH100001690
Research Analyst Details
Name: Ekansh Mittal Email Id: [email protected] Ph: +91 727 5050062
Details of Associate: Not Applicable
Analyst Certification: The Analyst certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report.
Address - 7, Panch Ratan, 7/128, Swaroop Nagar, Kanpur - 208002, Contact No. - +91-7275050062
Compliance Officer - Mr. Ekansh Mittal, +91-9818866676, ekansh@
Grievance Redressal - Mittal Consulting, grievances@
“Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors”.
“Investment in securities market are subject to market risks. Read all the related documents carefully before investing.”
The views expressed are based solely on information available publicly and believed to be true. Investors are advised to independently evaluate the market conditions/risks involved before making any investment decision
This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Ekansh Mittal/Mittal Consulting/Katalyst Wealth is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Ekansh Mittal or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Neither Ekansh Mittal, nor its employees, agents nor representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. Ekansh Mittal/Mittal Consulting or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement.
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Whether the research analyst or research entity or his associate or his relative has any financial interest in the subject company/companies and the nature of such financial interest – No
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