Eimco Elecon 523708 : A value pick at CMP of Rs 355-365 1-2 year Target Rs 600

About Company:  Eimco Elecon is a leading and established manufacturer and supplier of various Mining and Construction Equipment in India with operations supported by network of Sales and Service establishments located at various strategic locations throughout the country. It was incorporated in 1974 and went public in 1992. Situated at Vallabh Vidyanagar, Anand, Gujarat, Eimco Elecon is spread over a stretch of 15 acres. Eimco Elecon (India) Limited was first to introduce the intermediate technology of Side Dump Loaders (SDLs), Load Haul Dumpers (LHDs) and Rocker Shovel Loaders in India to partially mechanize the underground Coal and metalliferrous mines and continue to be market leader since then.

In order to maintain pace with demand for enhancement of productivity from mines, it also introduced Face & Roof Drills, Coal Haulers, different models of LHDs / SDLs, etc. for underground mines. Company has also started manufacturing Construction Equipment to cater the requirement of Construction Segment.

Financials Of Company:

	2016	2015	2014	2013	2012
Revenue(Crs)	139.58	196.41	193.39	171.57	178.47
Other Income	3.87	5.44	4.4	4	2.24
Total Income	143.45	201.85	197.79	175.57	180.71
Expenditure	-116.98	-166.99	-164.35	-149.77	-149.35
Interest	-0.31	-0.45	-0.3	-0.41	-0.49
PBDT	26.16	34.41	33.15	25.39	30.87
Depreciation	-3.69	-4.33	-5.11	-5.25	-5.31
PBT	22.47	30.08	28.04	20.15	25.56
Tax	-5.83	-8.56	-7.87	-5.01	-5.23
Net Profit	16.64	21.52	20.17	15.14	20.33
Equity	5.77	5.77	5.77	5.77	5.77
EPS	28.84	37.3	34.96	26.24	35.24
CEPS	35.24	44.81	43.83	35.33	44.45
OPM %	18.96	17.75	17.29	15.04	17.57
NPM %	11.92	10.96	10.43	8.82	11.39
Dividend %	50%	50%	40%	40%	40%

Investment Positives:

1. Consistent profit making and Dividend paying cash rich company
2. Strong promoter holding about 74%.
3. Book value of Rs approx 450 (as on 31-3-2016)
4. Company has surplus cash Invested in stocks and mutual funds and bonds worth 90 crores which will appreciate with rise in stock market and get interest and dividends and appreciation.
5. Revival of coal mining products of company should see increase in demand.
6. Available at PE multiple of 12to 13 on EPS OF 29 achieved in 2015-16.
7. Technical :52 week low was 276 and high was 693.Technically stock has bottomed out and in consolidation phase

Target price:  Share is available at CMP of Rs 350-360 at forward PE multiple of 12-13 .Strong promoter stake and current price is at 0.9 to book value. With the all-round revival of coal companies and introduction of state-of-the-art technologies products for mining sector, Company is expected to do better in future.

 Stock can be accumulated by long term investors with 2-3 years horizon for decent returns from current levels.

Disclosure: I am personally holding  shares of the company.