Switching Technologies Gunther : A fast growing MNC availaible @ Rs 112-115 Buy for long term Target 280

Switching Technologies Gunther Ltd., incorporated in the year 1988, is a Small Cap company (having a market cap of Rs 27.44 Cr.) operating in Electric Equipment sector having plant in Chennai export zone hence entitled for excise benefit. Also it is 100% exporting mainly to US, Europe & other countries

Switching Technologies Gunther Ltd. key Products/Revenue Segments include Switches Reed (Miniature) which contributed 80% of Total Sales, Sensors 14% of Total Sales 4% of Total Sales), for year ending 31-Mar-2014.

Company's top line had grown by 30% in 2014 to 16 crores and profitability for year doubled and earned EPS of 3.17 on small equity base of 2.45 crores. In last six months of current FY company has already achieved revenue of 9.71 crores with  EPS of 3.6 and is poised to deliver EPS  of 7-8 for year 2014-15 which would be double then the last FY.

Company is into manufacturing specialized niche products and 62% of equity is held by American parents Gunther inc.

MNC companies in India enjoy very high PE multiple looking at expected EPS of 7 the current PE multiple is 15-16 looks low.

Major positives: Company is operating only at 40% of capacity once it start producing with 100% capacity the revenue could go 2.5 fold and profitability should also increase in same proportionate. It uses Gold and Rhodium as major raw material and prices of both the metals are declining since last few months that should help company to improve margins with reduction in producing cost.

With increasing volume and demand in 1-2 year company can achieve turnover of 40 crores and EPS of 15-20 which should take the stock price to 300-400.

It’s a illiquid stock and traded at very then volumes on daily basis patient investors can start accumulating this MNC share at CMP of 112-115 for 100% returns in next 1-2 year.

Good Luck......................