Thread by @StocksTreasures

A new Auto Ancillary stock has came on my radar recently. The name of the Stock is #Talbrosengineering In this detailed #thread🧵 I'll analyse the Business, Fundamentals, Technicals, Financial Results and Management of TALBROS ENGINEERING.

Tags:
@kuttrapali26

🥇Business Part:-
Talbros Engineering Ltd is engaged in manufacturing of Axle Shafts. The company caters to both international and domestic market.

🥇Product Portfolio:-
The company is in the business of manufacturing different kinds of axle shafts.

Its product range includes light, medium, heavy duty axel shafts, off-highway, tandem, straight, front, assembled axel shafts and also produces spindle shafts for customers.Axle shafts account for 100% revenues of the company

🥇Client Concentration

✅The company has high client concentration with top 4 clients accounting for 75%+ of total revenues for last 3 financial years. It has been dealing with its top-3 clients for last 15 years.

✅It also has very limited bargaining power since its major customers are auto companies/ OEMs

✅Its customers include Mahindra, Dana, Automotive Axles Ltd, Volvo, Force, TAFE, Daimler, Ashok Leyland, Isuzu, Man, Tata, Axletech, Escorts, Maruti & Caterpillar.

🥇Geographical Revenue Breakup
The company earns ~80% sales from domestic market and the balance 20% from exports. It exports to USA, Brazil and Canada.

🥇 Manufacturing Capabilities
The company owns and operates 5 manufacturing facilities across Haryana.

It produced ~14,90,000 axles in FY20 as compared to ~19,30,000 in FY19. It has a licensed capacity of 21,000,000 axles p.a.

🥇Part of Talbros
The company is a part of Talbros Group which is a renowned name in the Indian Auto Ancillary landscape.

It manufactures a wide range of products for auto companies for e.g. gaskets, steering & suspension components, brake shoes, pads & linings, oil seal, wiper blades & others.

🥇Management

✅Rajesh Talwar:-President
✅Tarun Talwar:-CEO
✅Ashok Kumar:-Vice Chairman

🥇Fundamentals:-
✅Market Cap:- Rs 187 Cr
✅Stock PE:- 8.48(Undervalued)
✅Industry PE:- 24.2
✅Book Value:- Rs 182
✅Intrinsic Value:- Rs 797
✅Graham No:- Rs 423
✅ROCE:- 22.3%
✅ROE:- 27%
✅Sales Growth:- 47%
✅Profit Growth:- 108%
✅Promoters holding:- 72.8%

✅Public Holding:- 27.15%
✅Debt to Equity:- 1.06
✅Reserves:- 87.5 Cr
✅Debt:- 98 Cr(High Debt)
✅PEG Ratio:- 0.33
✅ Dividend Yield:-0.54%
✅Net Cash Flow:- -4 cr
✅Piotroski Score:- 8

🥇Financial Results

✅In FY 21-22 TALBROS ENGINEERING has done a Sales of Rs 351 Cr while Sales of previous FY was at Rs 239 Cr. Its Sales has increased 47% on YoY basis.

✅In FY 21-22 TALBROS ENGINEERING Net Profits was at Rs 22 Cr while previous FY Net Profits was at 11 Cr.

It means TALBROS ENGINEERING Net Profits has increased by 100% on YOY basis.

✅TALBROS ENGINEERING EPS has increased from 20.98 to 43.53 on YOY basis.

✅Since last 3 Quarters TALBROS ENGINEERING Net Profits is above Rs 6 Crs.

✅In last quarter TALBROS ENGINEERING did its

Highest sales in history of Rs 108.20 Cr.

🥇Chart Analysis📉📉📈📈

✅TALBROS ENG CMP IS RS 369. Stock is trading above its 9/20/50 EMA and also 44/200 MA.

✅TALBROS ENG is trading above its 200 DMA since Nov 2020 itself in June 2022 it broke its 200 DMA

And was trading below 200 DMA for 4 sessions and again formed an uptrend pattern.

✅As of present stock is facing a strong resistance at Rs 400.

✅Stock 52 week highs was at Rs 525 stock is available at 42% discount from his 52 week highs.

✅Below its 20 EMA it can go into

A Bearish zone.

✅One good factor for TALBROS ENG is it is trading above its all EMAs & MAs. If I had to take entry in this script I'll wait for one Bullish Candle🐂🐂 to be formed. If it closes above Rs 400 it will come under bulls eyes.

✨Why I'm interested in Buying this stock

✅Stock is trading at a single digit PE Ratio of 8.48 while its Industry PE is 24.2.

✅Intrinsic value is Rs 797 and Graham No is Rs 423. While CMP is only Rs 369. So, according to its IV and GN Number it is giving MOS

✅Company Sales and Net Profits has increased by 47% and 108% respectively.

✅In Dec 2017 TALBROS ENG share price reached at Rs 443.90 while if we see its Mar 2017 Sales and Net Profits. TALBROS ENG Sales of FY 2017 was at Rs 161 Cr and Net Profits was at Rs 9 Cr

TALBROS ENG share price reach at Rs 443 when its Sales and Net Profits was only 161 Cr and 9 Cr respectively. But, in FY 22 TALBROS ENG Sales reached at Rs 351 Cr, 118% more than FY 17 Sales and Net Profits reached at Rs 22 Cr, 145% more than FY 17 Net Profits and still its share

Price is quoting @Rs369. It is a highly highly highly undervalued business at current valuations.

✅It is a Smallcap company and I'll only put 5-10% of my capital in this stock as playing with smallcap stock is very Risky.

Note: This analysis was for educational purpose I'm not selling any advices. Consult your Financial advisors before buying and selling anything. I'm not asking you to buy anything if you buy and stock gives the profits it will be your profits and

Likewise if stock gives loss it will be your loss. I'll be zero percent responsible for profit/loss.