As of 19th September’ 2012, the company’s stock closed at USD 19.25. The stock has registered an average volume of 0.82 million over the last three months. The market capitalization of the company stood at USD 814 million. The company is trading at a trailing P/E ratio of 8.58, a trailing P/S ratio of 0.47, and a P/B ratio of 1.71.
During 1HFY12, the company recorded sales of USD 922.3 million, as compared to sales of USD 685.3 million during 1HFY11, representing a growth of 34.5% YOY. This was mainly a result of the increased demand in the company’s agriculture and earthmoving/construction sectors, which accounted for a 10% higher sales volume. However the sales figure was also inflated by company’s acquisition of Goodyear’s Latin American farm tire business during April 2011. Ignoring the comparative impact of the sales from new acquisition, the YOY growth rate achieved in revenues comes to 21.4%, which still represents healthy growth trends.
During 1HFY12, the company registered a gross profit margin of 19% compared to gross profit margin of 17.6% during 1HFY11. Earnings per share of the company were recorded at USD 1.89 in 1HFY12, compared to USD 0.55 in 1HFY11. The company’s gross profits and net income improved as a result of cost leveraging and productivity gains on the higher sales volume, and select price increases on certain products that overpowered the increase in cost of raw materials.
As of 30th June 2012, the company had a book value per share of USD 11.24, and cash value per share of USD 3.53. The total debt to equity ratio of the company was recorded at 67.18, whereas the debt to equity ratio for consumer goods sector is 117.06, and for Rubber and plastics industry it averages around 93.84.
The stock has great potential based on strong fundamentals and relative valuation detailed below; so, VALUE investors watch out !!!!
* The company’s double digit growth in revenues bodes well for its future performance, and with a good price mix can provide a real boost to its bottom line.
* The company’s mining service business is doing really well, as the company has recently opened a facility in the oil sands in Canada, and has already received a demand to double the facility
* The stock’s relative valuation reveals that it is selling at a significant discount, with a P/E ratio of 8.58, which is less than its competitor Appllo Tyres Ltd (P/E 10.3). Also the P/S and P/B ratios of the company present attractive valuation levels.