Saturday, February 22, 2014

Mazda Ltd - Value Buy

Mazda is an engineering company established in the year 1990. The company mainly manufactures vacuum systems and evaporators.

The average ROCE of the company over the last ten years is around 30% but it was lesser at 25% last year. The company has consistently paid dividend over the last 14 years. The company sold its valve division in FY11 for around 13 Crore which resulted in exceptional after tax income of 10.824 Crore. The company had investments to the tune of INR 18.8 Crore in mutual funds and short term investments at the end of FY13. Beyond this, the company had net current assets to the tune of INR 39.12 Crore in FY13. The company had negligible debt of INR 2.41 Crore at the end of FY13. So the current enterprise value of INR 45 Crore is way lower than the amount of 58 Crore at which the company can be liquidated.

Special Food Division
Company has started a food division which had a turnover of INR 8.52 Crore with an operating profit of INR 1.07 Crore in FY13. They are selling instant drink powder, fruit jam, ketchup and custard powder under the brand bcool.

Promoters are very shareholder friendly and their stake in the company over the last one year has increased by more than 5% and most of the shares were acquired from open market between the price of INR 80 and 100.

Mutual Fund Holding
Very few mutual funds are holding the company.

The company at the current market price of INR 102 is trading at much lower than its book value of INR 194. With a healthy cash flow of INR 10 Crore, the company is damn cheap at INR 45 Crore valuation given its investments and net current assets.
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