Hilton Metal Forging Limited(532847) : Buy at CMP 18-19 for long term target of 30-40

Hilton Metal Forgings is a world class manufacturer of machined components and engineered parts for a variety of industries. It provides technically superior parts that become a vital element for several industries and aid the growth of a nation. Our stainless steel flanges are in high demand due to their consistency and wide size range. Company is exporting to more than 35 countries apart from domestic customers. EIL, TOYO Engineering, Nuclear power corporation, Petro Bras, Sasol, Ministry of Defence, Ordinance factories are some key customers.

Company has been growing at a decent pace till 2013 but in 2014 it experience negative growth and topline revenue dropped by 18% which was due to lesser demand due to lower GDP growth.

Going forward company can again witness growth in coming years due to increasing demand from defence, engineering sector.

Technically stock has bottomed out and could start his upward journey with improvement in financials. Last 9 months company has achieved revenue of approx. 76 crores with NP of 2.4 crores. It can achieve revenue of approx. 105 crores this year and could deliver EPS of 3.3.

Share is available at PE multiple of 6 which is cheap in comparison to other forging companies. Book value is approx. 40.Company has been paying low dividend to reduce debt and last year dividend paid was 5% and this year dividend could be slightly higher.

With reduction in raw material cost margins are improving and expected NP is better than last year inspite of lower revenue.

This company is worth investing at current market price for long term target of 30-40.

http://www.hmfl.co.in/