Hawa Engineers Limited : Buy at CMP Rs 32-34 long term Target Rs 60

About Company:  HAWA ENGINEERS LIMITED is the manufacturer of Industrial Valves under brand name MARC and precision engineering goods,  range includes a wide range of products, mainly Gate, Globe, Check, Pressure Reducing, Control & Safety Relief Valves as well as Strainers, Steam Traps etc. for application in various industries. Company has manufacturing unit at Ahmadabad, Gujrat. Company has it’s own foundry for manufacturing.

Financial Performance. Company achieved turnover pf 45 crores in FY-14-15 registering a net profit of approx. 68 lakhs on a small equity base of 3.5 crores resulting in EPS of 1.94.
In current financial year 15-16 the top line has decreased to 19.43 crores in comparison to H1-14-15 where in company achieved revenue of 23 crores, But interesting point is the net profit margin has improved which increased half year net profit of 71.78 Lakhs resulting in EPS Of 2.04 in comparison to last year full year profit of 68 lakhs.

Valuation:
Company is in a good position to improve financial performance from here improvement in economic scenario should see demand of the products growing.

It has strong client base of private and public sector companies such as BPCL, HPCL, Meacon, SAIL, BEML etc & also started exporting to south Africa, Dubai, Sudan, Bangladesh, Srilanka, Portugal, Iran , Iraq.

I expect company to declare EPS OF 4 in FY-15-16 and it should experience faster growth in 2016-17 & 2017-18 with increase in export and local demand due to increase in infrastructure spending.
Long term investor can invest in this small cap company from 1-3 year horizon for multiple returns.

Stock has potential to create new high by touching Rs 60 in 6-12 months