medium term buy call - JAYBHARAT MARUTI

   JAYBHARAT MARUTI
   nse code: jaybarmaru  bse: 520066  cmp: 84.20

  

Jay Bharat Maruti is making the sheet metal components as well as assemblies and sub-assemblies for Maruti, M&M and Eicher. But the major portion of the supply of the company goes to the Maruti. If you see the promoter holding, part of the stake is held by Maruti in the company as well.

Going by the financial performance, the growth has been quite good, turnover of more than Rs 1,000 crore plus with EPS of close to about Rs 17. The company has a face value of Rs 5. The depreciation in the books of the company is quite high which results into cash EPS of close to about Rs 33-34.

The share is ruling at a PE multiple of five on the historic earning as well as on a cash EPS it is ruling at a PE multiple of close to about 2.6. So, going by all this and considering the growth in the auto sector,  the company should be able to maintain a growth of about 30% on the top-line, and maybe 35% to 40% on the bottom-line. All their three plants are doing quite well.  going forward, they should not have a problem of posting an EPS of Rs 16 as well as cash EPS of close to about Rs 36-40.

So, going by that, the share looks quite cheap. One can expect a price of Rs 105-110 in next six months or so. The stock price shows quite a good up move, quite a good volatility. Whenever stock crosses Rs 105-110, we see some profit booking come in. So, maybe share is now ruling virtually at its lower level and one can expect a price of Rs 105-110 in next six months.