Magna Electrocasting 517449 : Buy at CMP Of 100-102 For Long term Target of 150-160 in 1 -2 year

Magna Electro casting: A Coimbotore based company has come up with excellent half yearly results with top line growth of 30%.
Half yearly reported ES is 7.8 and assuming that it would double one should expect an EPS of 15-16 so stock is available at a forward PE multiple of 6 which looks cheap and attractive for investment.It has a book value of approx 80 and very low debt equity ratio. Company has consistently paid dividend in last 5 years and last year dividend was 16%.


"Magna is in the Business of Manufacturing and Supplying Ferrous Components in small and medium volumes to users worldwide.

Magna specializes in the manufacture of Ductile Iron and Gray Iron casting in the weight range of 300 grams to a maximum of 2000 Kilograms. Magna also adds value by heat treatment, surface treatments and machining so that the products are ready to assemble.

Magna also produces fully machined components, utilizing its in-house CNC machine shop and other facilities as well. Magna has extensive experience in the supply of safety requirement components in the casting and fully machined forms. The components meet stringent requirements in terms of Radiographic Quality and Metallurgical Control.

Magna has established warehousing in the USA, this facility along with bi-weekly container shipments, allows us to cater to low volume requirements. Also our warehousing capability enables us to supply products just in time, to customers in the United States of America."

The stock can be bought at current levels for decent short term and long terms returns. Interestingly Elgi equipment has a small stake in the company that adds to fundamentals of company.