TVS Motor: Riding fast on new launch

ANALYSTS' CORNER

Sharekhan recommends a "buy" on TVS Motor. The report states that the company, one of the largest players in the two-wheeler segment in India, is a perfect play on the boom in the country's two-wheeler industry.

The company has indigenously developed a number of products. It now has a strong presence in all the product categories, viz motorcycles, scooters and mopeds.

The proposed foray into the three-wheeler market should further fuel the company's growth. It's recently launched motorcycle, Apache, has won huge accolades and is expected to capture a 13 per cent share of the premium segment in FY07.

Apache has been launched in only select cities and the initial response to the model has been encouraging. A national roll-out is expected by April 2006.

With a rise in its volumes, the cost-cutting measures undertaken, an improved product mix with more higher-end products and an entry into the three-wheeler segment, the margins of the company are set to improve. The same is expected to expand by 380 basis points to 11.2 per cent by FY08.

Bharat Forge: High on EPS prospects

Merrill Lynch recommends a "buy" on Bharat Forge. The report expects re-rating of the stock on renewed growth prospects. It is also raising EPS forecasts by about 6 per cent for each of the next two years, consequent to improved growth visibility of its domestic customers.

From Q4 FY06 onwards, it expects the company to revert to about 40 per cent y-o-y net profit growth, a reversal of slowing trends witnessed in the past two quarters. On a consolidated basis, the company trades at 24x FY07E EPS and 18.3x FY08E EPS.

The report justifies the premium valuations on the strong 38.7 per cent earnings CAGR over the next two years. At the same time, the risks include rise in input costs, exchange fluctuations and the task of managing growth.

Clutch Auto: Big on global plans

Angel Broking recommends a "buy" on Clutch Auto. The report states that the company is the leader in tractor and commercial vehicle clutches.

As a part of its long-term strategy, the company has embarked on a structured plan to be an international niche player in the heavy duty clutch segment.

Accordingly, the company has also developed a patented low pedal clutch for every class-7 and class-8 trucks used in the US market. It has received a multi-million dollar order from Fleet Pride Inc.

This prestigious order is expected to result in peak annual offtake of $60 million for the company. Fleet Pride is a heavy duty class parts distributor in the US and caters to the clutch requirements of class-7 and 8 trucks there.

The company exports to major American markets and expects to cater to more geographical locations going ahead. In the next 2-3 years, it plans to have exports accounting for 50 per cent of its turnover.