Salzer Electronics (517059) : A fundamentally strong company available at CMP of Rs 210-212 Target 2-3 years Rs 500

About Company: Salzer Electronics Limited, was established in 1985 to design and manufacture world-class Cam Operated Rotary Switches in a time bound Technical collaboration with M/s. Saelzer Schaltgerate Fabrik, GmbH., Germany. The company has a consistent track record for the last 22 years in Profit Making and declaring Dividends since 1991 - 1992.

Today, Salzer is the market leaders in India for Rotary Switches, PV application switches & PVC wiring ducts.

Salzer manufactures Rotary Switches, Load Break Switches, Wiring Ducts, Terminal Connectors, Selector Switches, Ammeter Switches, Voltmeter Switches, DC Disconnectors, Electro Magnetic Relays and Magnetic Wires. Besides Modular Wiring Accessories and allied specialty products with international approval and innovative designs the market share for these products is continuously growing. Switch gear is the largest segment with more than 10 products in this segment.

The Company has also entered into technical and financial collaboration with M/s. Plitron Manufacturing Inc., Canada(Leading manufacturer of transformers in North America), in 1995 for manufacturing Toroidal Transformers with 50% buy-back.

Company has 5 manufacturing units 4 at Coimbatore and one at UNA(HP)..

M/s. Larsen & Turbo Limited has been marketing Salzer Switches throughout India since 1993.

Financials Of Company:

	2016-E	2015	2014	2013	2012	2011
Revenue(Cr)	355	283.3	244.53	228.73	222.88	180.66
Other Income	1	1	0.93	1.39	0.91	0.68
Total Income	356	284.31	245.46	230.12	223.79	181.33
Expenditure	-312	-247.85	-214.31	-200.27	-194.12	-154.85
Interest	-13.5	-12.34	-11.94	-11.77	-11.59	-8.9
PBDT	30.5	24.12	19.21	18.09	18.08	17.59
Depreciation	-7.75	-7.15	-7.52	-8.67	-7.96	-6.9
PBT	22.75	16.97	11.69	9.42	10.12	10.68
Tax	-5.5	-4.99	-3.25	-2.36	-1.93	-1.63
Net Profit	17.25	11.98	8.44	7.06	8.19	9.05
Equity	13.65	10.28	10.28	10.28	10.28	10.28
EPS	12.64	11.65	8.21	6.87	7.97	8.8
CEPS		18.6	15.52	15.3	15.71	15.51
OPM %		12.87	12.74	13.05	13.31	14.66
NPM %	4.86%	4.23	3.45	3.09	3.68	5.01%
Dividend %	18%	15%	15%	12%	12%	12%

Investment Positives:

1. Consistent profit making and Dividend paying company
2. Achieved CAGR Of 25% in last 7 year.
3. CAGR of Net Profit  over last 7 year was 17%.
4. Net profit growth of 42% in year FY 14-15 over FY13-14 expectation is of similar growth in 15-16
5. Book value of Rs 104 (as on 31-3-2015)
6. L&T had 26% stake in equity till July -2015 which has been sold off.
7. Company is targeting to achieve 1000 crores revenue by 2020.
8.  25% revenue comes from export and balance 75% from domestic sales.
9. Already achieved turnover of 270 crores in FY-2015-2016 YTD-Q-3 with NP of 13 crores.

Target price:  Share is available at CMP of Rs 210-212 at forward PE multiple of 16-17 .Company is targeting to achieve revenue of 1000 crores by 2020 that would result in  30% growth year on year .stock can be accumulated by long term investors with 2-3 years horizon for 30% annual returns from current levels.

Disclosure: I am personally holding  shares of the company.