Anand Rathi recommends Clutch Auto (CAL) at the current market price of Rs 85.The company has secured a $60mn order from Fleet Pride, a leading heavy-duty class parts distributor in the US with a network of 165 delivery outlets and 5 nationwide warehouses in North America.The order has to be supplied over a 5- year period. With this, CAL became the first Indian component manufacturer to enter into a single step distribution network in the US.CAL has also entered into a supply agreement with a worldwide distributor of tractor parts for the US and European markets.In the Domestic OEM segment the company's growth prospect depends on the growth rates in key segments like commercial vehicles, tractors and cars. The CV and tractor market is projected to grow at 10-15% going ahead.With OEM business largely being a stable revenue stream, replacement market and exports would be the main driver for Clutch Auto.Clutch Auto is the largest domestic Clutch manufacturer with dominant market share in CV and tractor segments. Having a diverse market presence in the OEM, replacement and export markets, the company caters to all big names in the segment viz: Tata Motors, Ashok Leyland, M&M, Escorts, Punjab Tractors & Eicher etc.The company's strategy to be a niche player in the low volume, high value added heavy-duty clutch segment for class 7 and 8 trucks in USA would help in clocking strong export growth in the coming years.TECHNICAL VIEWOn 9 May, 2006, Clutch Auto has exhibited an upward bar reversal from the low of Rs 71.25. One may note that an upward bar reversal is said to have occurred when the low of any bar is lower than the previous bar's low and the close of the bar is higher than the previous bar's close.This pattern has bullish implications. Also, the RSI line has enetered the oversold zone, indicating that the scrip is oversold and may be due for a corrective upmove. The scrip faces resistance at around Rs 105.
