STOCK RECOMMENDATION - SUBROS

Subros

BSE: 517168  NSE: SUBROS   CMP: 35.00

Subros Ltd. is looking extremely bullish on charts and has recently witnessed some serious buying with huge volumes. Scrip can further shoot up 20-30% in the short-term. For Q4FY12, it reported a huge profit on sale of immovable property but even fundamentally the company is doing well. Backed by the support from Denso Corporation, Japan as a technical collaborator and Suzuki Motor Corporation, Japan as a customer partner, it is India's No.1 automotive air conditioning company commanding 40% market share. It is the largest and only integrated manufacturer in India with capacity of 15 lakh AC units per annum. Its product range spans across auto airconditioning and engine cooling systems for passenger as well as commercial vehicles. Lately, the company has ventured into railway air conditioning systems and has chalked out a Rs.140 crore expansion of its manufacturing capacity by 5 lakh units by end FY13 to take its total installed capacity to 20 lakh units per year. To maintain its growth momentum, the company is setting up a new facility with an initial installed capacity of 2 lakh AC units in the vendor park area of Tata Motors at Sanand in Gujarat to cater the production requirements of the low cost car ‘Nano’. On the other hand, to increase its market share in south India, it is putting up a new automotive AC unit in Chennai as well. Additionally, it intends to expand the production capacities of its existing three facilities in Noida, Manesar and Pune. Recently, the company commenced in-house production of Evaporators, which were being imported till now this will reduce the overall cost of production of its AC units. Meanwhile its overseas subsidiary, which caters to Tata Motors’ Thailand operation has now turned profitable unit and will start contributing to the consolidated bottomline. For FY12, it posted a turnover of Rs.1156 crore with operating profit of Rs.97 crore. Due to increase in depreciation and interest cost, it posted a PAT of Rs.48 crore including Rs.29 crore exceptional profit on sale of immovable profit. Hold on to your position.