About the Company:

Igarashi Motors India Limited is an India-based company, which is in the business of auto components for automobiles. Igarashi is a full service electric motor supplier to the power train actuator application. Igarashi Motors is also deals in the production of micro motors and its accessories for the automotive sector. The Company's products include electric micro motors, and stamping and motor components.

The Company's electric motors are used in different applications, such as electronic throttle control valves in engines, including air control valves, waste gate actuators, exhaust gas recirculation valves and bypass valves in turbo chargers and fluid control valves for thermal management applications. Igarashi Motors sells its products in United States, Asia and Europe. It also caters various applications such as motors for active accelerator pedal module (APM), automated manual transmission (AMT), electric parking brake (EPB) and motor assemblies for fuel pump.

Igarashi Motors India Limited is in a list of Multibagger Stocks in Dynamic Levels, Igarashi share price has touched a 52 week high of Rs. 773.70 on 05-Aug-2015 and a 52 week low of Rs. 375 on 01-Mar -2016.

Financial

On quarterly basis the company’s net revenue from operations reached to Rs.126.63 crore in Q4FY16 compared to Rs. 101.84 crore in Q4FY2015 an increase of 24.32%.The operating profit stood at Rs. 26.80 crore in this quarter compared to Rs. 21.65 crore in Q4FY15. The profit after tax for the quarter stood at Rs. 18.55 crore compared to Rs. 17.04 crore same period last year.

For the year ended March 31, 2016 Igarashi Motors reported net profit of Rs. 63.64 crore compared to Rs.48.95 crore FY2015 registering growth of 30% YOY.

Global Automotive Industry highlight

• The fixed investment in automotive capacity in Asia pacific is estimated to be 60% of the total global investment.
• The vehicle volume from the current 75 Million vehicles per annum is expected to cross 110 Million by 2022.
• Out of the 110 Million vehicles estimated for 2022, approximately 90% is expected to be pure ICE vehicles (‘Internal Combustion Engine’) while the balance 10% will be a combination of electric vehicles and hybrid electrical vehicles.
• The share of automotive production in Asia was 33% in 2000 which went upto 50% in 2012 and is likely to be upwards of 55% by 2020. Vehicle sales in Europe are expected to remain stagnant between 15 to 18 Million annually and the main growth is expected in Asia pacific and to an extent, in Americas.

Conclusion

The year 2014 was a period of relatively strong growth and profitability for the Global Automotive Industry.

The outlook for the US Markets seems robust while that in European markets seem to be slightly weak but improving. In the growing economies, Russia and South America reported lower sales growth while the Indian market is inconsistent but improving. The Automotive market in the World’s largest economy, China, was marginally down. The major change drivers in the industry are expanded availability of information and data attributes, regulatory requirements focusing on safety and environmental pollution, shifts in consumer demand, and technological breakthroughs relying more on electronics and software which has led to entry of Information Technology firms and autonomous automotive vehicles in the industry. Although, the growth of applications using Company’s electric motors is expected to continue to grow, geographical shift towards China and the pressure on companies to localize manufacturing in countries like in Mexico and Eastern Europe are beginning to gain momentum.

As per our estimate, the stock at CMP of 635 is trading at P/E of 31.07, with market cap of 1921.29 crore. The debt equity ratio of the company is 0.17. The return on equity is 19.50% and return on asset is 15.23.

On the basis of above factors we recommend a buy in Igarashi Motors India Limited long term with a target of Rs.750.