Pix Transmissions Ltd. - BUY

 

Listed on BSE only
CMP- Rs. 34.10
Target- Rs. 48

PIX Transmissions Ltd., is the leading manufacturer of Belts and related mechanical transmissions products in India.  The Company has state-of-the-art Belt manufacturing units as well as a completely automated Rubber Mixing facility in Nagpur.

The product range includes;

• Industrial Belts
• Automotive Belts
• Harvester Belts
• Powerware & Hydraulics products

Brief history of the company:
- Established in 1981
- Listed on BSE in 1989
- Established PIX Europe Ltd., United Kingdom in 1999
- Acquired Distag Euro Ltd., United Kingdom in 2000
- Established PIX Germany GmbH, Germany in 2004
- Established PIX Middle East FZC, UAE in 2007
- Acquired Flexequip Hydraulics Limited., Northern Ireland in 2007
- Started fully automated centralised mixing plant at Nagalwadi, Madhya Pradesh in 2009
- Established PIX Hydraulics & Transmissions Ltd., China in 2009

Current industry environment:
Pix transmission supplies to TIER1 suppliers and Some OEMs which are into manufacturing sector.
So sales of the company are directly corelated to the prevailing interest rates.
It is quite evident that, the rates are at their peak and with WPI inflation lowering to 4-5% and likely change of government at the Centre, RBI may drop the interest rates.
This will boost the sales further.

Financials:

	All  values in Rs. Cr.
	Mar '13	Mar '12	Mar '11	Mar '10	Mar '09
Net Sales	232.09	216.73	228.29	169.34	178.84
Total Expenses	199.7	175.34	182.3	137.39	156.06
Operating Profit	32.39	41.39	45.99	31.95	22.78
OPM as % of Net sales	14%	19%	20%	19%	13%
Net profit	106.54	0.62	3.64	0.7	-3.99
Equity Dividend (%)	45	0	7.5	0	0

Due to slowdown in the manufacturing sector, projected sales by Mar'14 are likely to be lower than previous year. However, Q1-F15 will coverup due to likely factors as mentioned above.
The OPM of the company has been consistently maintained above 15%.

The company has substantially reduced its Debt burden during last year. The Debt/Equity ratio has fallen from 5 to 0.6 in FY13. This will provide leverage for the company for further expansion.

During FY15, the company is likely to surge in terms of financial performance. The stock may give as much as 40% return by 1st Half (Sep-14).

Within 6 months, expect the stock to reach Rs.48.

Investors with slightly high risk taking capability should pick this golden stock.

Company link: http://www.pixtrans.com/

Disclaimer: It is safe to assume that I have vested interest in this stock. This recommendation is purely based on personal understanding and is not responsible for any loss arising out of investment, whatsoever.