Investor preference is a funny thing. Till a few weeks ago, many cyclical stocks were at their near bottoms and suddenly one sees a frenzy of purchases, especially by FIIs, that has driven these stocks in a new orbit. Many investors have shown a bias for the industrials and the previous passion for pharma, FMCG and software seems to have topped out, at least for the moment.
Munjal Showa is an auto ancillary company belonging to the Hero Honda group. It is an exception in the auto ancillary sector being one of the few companies that has remained unaffected by the recession and has in fact done well. It issued a 1:1 bonus in 1998. At its current earnings per share of Rs 21 (annualised), the scrip is discounted 8.3 times. The scrip quotes at Rs 174 (ex-bonus) currently and with the auto industry expected to show a revival, Munjal Showa should see better times.
Munjal Showa (MSL) is the second largest shock absorbers, struts and telescopic front forks manufacturer with a capacity of 42 lakh units. Gabriel India is the industry leader. MSL is a joint venture between Showa Corporation, Japan (26 per cent) and the Munjal group (39 per cent). Besides technical support, the parent has also ensured th