{"id":1112,"date":"2018-06-12T18:33:00","date_gmt":"2018-06-12T18:33:00","guid":{"rendered":"http:\/\/oscillationss.blogspot.com\/?p=1112"},"modified":"2018-06-12T18:33:00","modified_gmt":"2018-06-12T18:33:00","slug":"stock-updates-lokesh-machines-kennametal-india-hercules-hoist","status":"publish","type":"post","link":"https:\/\/oscillations.in\/?p=1112","title":{"rendered":"Stock Updates: Lokesh Machines, Kennametal India, Hercules Hoist"},"content":{"rendered":"
\n<\/p>\n

<\/p>\n

\nLokesh
\nMachines:<\/span><\/u><\/b> It was shared earlier at 74 ( Click here<\/a> for
\nearlier post)<\/span>. <\/span>At
\nthat time the company was in revival mode and as expected it has shown great
\nimprovement in results this year and it appears to be on strong recovery path.<\/span><\/p>\n<\/div>\n
\n<\/div>\n
\nMachine tool industry will be one of the biggest beneficiaries
\nof revival in manufacturing, Automation and Make in India initiative. This year
\nits turnover is at 175 cr vs 132 cr, PBT at 7 cr vs 3 cr, a reflection of strong
\nrecovery and much better time ahead. Lokesh does not just make small machining
\ntools but large high tech CNC machines which contribute 61% to its topline.<\/span><\/span><\/div>\n
\n<\/div>\n
\nEarlier, its capacity expansion mistimed with
\nslowdown in auto sector resulted in it being saddled with debt of 125 cr and high
\ninventory. But now with revival, It has cut down its debt this year further by
\n12 cr to 70 cr out of which 64 cr is working capital loan. Its inventory levels
\nare generally high as it procures orders for large CNC machines requiring 3
\nmonths for completion but i think we’ll see more improvements this year.<\/span><\/div>\n
\n<\/div>\n
\nAs
\nshared in earlier post, machine tools are at the core of manufacturing and
\nwithout a powerful machine tools segment, manufacturing excellence cannot be
\nachieved. This is evident from the fact that major manufacturing global
\npowerhouses like China, Japan and Germany are one of the best high precision
\nand sophisticated machine tools producers. So if India dreams to be a
\nmanufacturing destination then we need to invest significantly in machine tools
\nbecause high tech machines can\u2019t be produced by hands.<\/span><\/span><\/div>\n
\n<\/div>\n
\nLokesh
\nmachine is one of the very few in India who can produce HMC machines
\n(Horizontal machining centre) as India meets 50% of its demand of HMC machines
\nfrom imports. It is only Indian and few among global to manufacture
\nmachines for Euro 6 engine platform. <\/span><\/span><\/div>\n
\n<\/div>\n
\nAt
\npresent most of the demand for metal cutting tool machinery is from automotive
\nsector but with the thrust of government on make in India, demand for newer
\nsector like railways, defence and consumer durables etc. will present big opportunities
\nfor machine tool industry in India. <\/span><\/span><\/div>\n
\n<\/div>\n
\nSo i
\nthink Lokesh deserves a place in Tier 2 (risky) portfolio along with
\nKennametal. I have done good buying of it during the recent fall from 80 to 55.
\nAvg now is 63…today picked more and i am in last stages of buying as i think
\nit has fixed its tools.<\/span><\/span><\/div>\n
\n<\/div>\n
\nKennametal India:<\/span><\/u><\/b> <\/span>It is a global giant in
\nmachine tool industry. it was shared earlier at 570 <\/span>( Click here<\/a> for earlier post)<\/span><\/span>. It is also in a strong recovery zone and posted stellar performance
\nthis year. It has fallen all the way from 1000 to 750 levels. I have utilized
\nthis opportunity in adding more of it regularly around 720-750 levels. Now Avg
\nis 620 and I am almost done with my buying. Mar quarter turnover is at 198 cr
\nvs 165 cr last year, PBT at 27 cr vs 10 cr. Full year topline is at 565 cr vs 476
\ncr but major improvement is in PBT of 56 cr vs 25 cr. I think this one will
\npost net profit of around 60-70 cr this year and at market value of 1600 cr it
\nis trading at 20-22 PE which is very cheap for a global giant. Must be a part
\nof Tier 1 (High quality\/Safe) portfolio.<\/span><\/div>\n
\n<\/div>\n
\nHercules Hoist:<\/span><\/u><\/b> <\/span>It was earlier shared at 160
\n<\/span>( Click here<\/a> for earlier post)<\/span>. It is a Bajaj group company dealing into Hoist
\npulley systems for a variety of Industries primarily under Indef Brand. It was
\nunder my watch for long time. <\/span><\/div>\n
\n<\/div>\n
\nActually after GST, demand for very large warehouses
\nwith size up to 5 Lac Sq feet, will rise. Presently majority of warehouses are
\nsmall (As companies are required to be present in every state to save the extra
\nInter-state taxes) with no economy of scale and no automation whatsoever. But
\nGST will make large companies like Suzuki, Hero, Nestle to have one large
\nstrategically located warehouse covering a large geography, say in Nagpur for
\ncatering to entire western India market. These gigantic scale warehouses will
\nbring in economies of scale in logistics and supply chain. So the demand for
\nAutomation will be huge to cover the scale of operations.<\/span><\/div>\n
\n<\/div>\n
\nThis is where i think Hercules can get big business
\nas it is already into Material handling and material retrieval products. Growth
\nof other industries will also spur the high growth in the future. <\/span><\/div>\n
\n<\/div>\n
\nAt CMP of Rs. 126 its market cap is 400 cr but it is
\nhaving stocks of various Bajaj group companies like Bajaj Finserv, Bajaj Auto,
\nBajaj Holdings and Bajaj Electricals and MF valuing 250 cr, has 2 acre vacant
\nland in Mulund in Mumbai (I think it should get around 70-80 cr). So out of 400
\ncr, 320-330 cr (80%) belongs to Investments and land. So we are getting the
\nrest of the company with one of India\u2019s best material handling brand for just
\n20% (80 cr). It earns around 10-12 cr as dividends from these investments which
\nprovides the stability to the bottom line. It is operating around 1\/3rd<\/sup>
\ncapacity so any improvement in the top line will add significantly to the
\nbottom line and this is a strong re-rating candidate with nil debt and high free
\ncash flow generation capabilities.<\/span><\/div>\n
\n<\/div>\n
\nLike other Industrial input stocks, it also had to
\nface the slowdown in the core business. But this year was the period of revival
\nand It has shown improved results so far. During last 2 quarters, Its turnover
\nhas been increased to 43 cr vs 29 cr. PBT at 5 cr vs loss of 30 lac. Material
\nhandling and warehousing automation industry is witnessing strong growth. GST
\nis expected to bring high level of automation in Warehousing sector and
\nHercules will be one of the biggest beneficiaries. It is still not in the radar
\nof the market.<\/span><\/div>\n
\n<\/div>\n
\nWith improvement in its results, it has announced
\ndividend of Rs. 1.25 this year (Re. 1 last year). Bajaj group is a generous
\ndividend distributor and we can expect liberal dividends in the future when it\u2019ll
\nwitness full revival. I made my initial entry at 160 but luckily during recent
\ncorrection it went down to 105 levels and I am buying it regularly from those
\nlevels. Today done another buying at 125…Avg now is 130.<\/span><\/div>\n
\n<\/div>\n
\nWhen buying companies which are in revival mode, i
\nprefer staggered buying approach…buying at every improvement even at much
\nhigher price and at every slide during market corrections. This implies not
\naiming for perfection in entry price but perfection in entry time. Following
\nthis approach, there are some stocks like Clariant, Schneider electric in which
\ni have not made further investments after initial entry as these have not shown
\nany improvement in the results…so i am waiting just outside.<\/span><\/div>\n
\n<\/div>\n
\n(Views
\n are personal and should not be taken as a recommendation for buying or
\nselling a stock. Stock markets are inherently risky so kindly do your
\nDue Diligence before investing. I am not a certified Sebi Analyst and
\nholding the shares discussed in this Post).<\/span><\/span><\/span><\/span><\/span> <\/span><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Lokesh Machines: It was shared earlier at 74 ( Click here for earlier post). At that time the company was in revival mode and as expected it has shown great improvement in results this year and it appears to be on strong recovery path. Machine tool industry will be one of the biggest beneficiaries of revival in manufacturing, Automation and Make in India initiative. This year its turnover is at 175 cr vs 132 cr, PBT at 7 cr vs 3 cr, a reflection of strong recovery and much better time ahead. Lokesh does not just make small machining tools…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1112","post","type-post","status-publish","format-standard","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/oscillations.in\/index.php?rest_route=\/wp\/v2\/posts\/1112","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/oscillations.in\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/oscillations.in\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/oscillations.in\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/oscillations.in\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1112"}],"version-history":[{"count":0,"href":"https:\/\/oscillations.in\/index.php?rest_route=\/wp\/v2\/posts\/1112\/revisions"}],"wp:attachment":[{"href":"https:\/\/oscillations.in\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1112"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/oscillations.in\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1112"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/oscillations.in\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1112"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}