Hello Sir,

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

You can get it along with other recommendations, by subscribing HERE


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.


Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/


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