Sona Koyo Steering Systems – A Good Investment At Low Price

Market Leader Available At Such A Low Price

Sona Koyo Steering Systems – A Good Investment At Low Price

Sona Koyo Steering Systems – A Good Investment At Low Price
Sona Koyo Steering Systems – A Good Investment At Low Price | Source
Sona Koyo Steering  Systems - Share price movement
Sona Koyo Steering Systems - Share price movement | Source

Sona Koyo Steering - Latest Results

(in Cr.)
Dec-11
Sep-11
FY10-11
Revenue
251.79
272.39
1,034.60
Net Profit
7.03
6.76
37.41
EPS
0.35
0.34
1.88
Cash EPS
0.77
0.74
3.31
OPM %
10.2
10.02
10.89
NPM %
2.79
2.48
3.62
Sona Koyo Steering - Latest Results

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Sona Koyo Steering - Share Price Movement

 
 
 
Weekly H/L
12.24
10.8
Monthly H/L
14
9
52 Weeks H/L
19.5
9
 
( 8 Apr 11 )
( 23 Mar 12 )
Delivery / Var+ELM %
82.89
30.98
Sona Koyo Steering - Share Price Movement

Market Leader


Average Results

Sona Koyo Steering had reported average results for the quarter ended 31.12.11 compared to the previous quarter. While revenue has declined from Rs.272 crore to Rs.251 crore, net profit has increased from Rs.6.76 crore to Rs.7.03 crore. Revenue for the whole year 2010-11 was at Rs.1034 crore and the net profit at Rs.37.41 crore. Operating profit margin and net profit margin have marginally increased. The shares of Sona Koyo Steering are traded in the Indian stock markets at Rs.11.43 now (BSE 30.03.12). The face value of the company’s shares is Rs.1. Sona Koyo Steering is operating in the auto parts and equipments sector. The highest and the lowest price recorded by the shares of Sona Koyo Steering in the last one year are at Rs.19.50 and Rs.9 respectively.

Market Leader

Sona Koyo Steering has been nursing ambitions of becoming a major player in the international auto components market. Right now the company is travelling towards that goal. Sona Koyo Steering is India’s largest manufacturer of steering systems. The company is particularly doing well in the electronic power steering segment. Sona Koyo Steering has a market share of 65% in electronic steering segment, 38% in hydraulic steering and 66% in manual steering.

Promoters’ Holding High

During Q1, Sona Koyo Steering increased its sales turnover by 45% to Rs.337.5 crore from Rs.232 crore in the corresponding period of the previous year. Profit after tax increased to Rs.15.7 crore from Rs.4.2 crore in the corresponding period of the previous year. The company achieved this result through diversification of its customer base. The Sona group has a turnover of Rs.1200 crore. Indian promoters hold 25.61% stake in the company, foreign promoters 20.1% and Maruti Suzuki 6.94% in the company. This shows the promoters’ commitment to the development of the company.

Expansion, Modernisation And Diversification

Entry barrier for the manufacture of steering systems is very high because of the technology and quality factors that come into play. Sona group is targeting a turnover of Rs.1600 crore from the present Rs.1200 crore. The group also has a long term plan of reaching a turnover of Rs.10000 crore by the year 2020. Sanjay Kapur is the Managing Director of Sona Koyo Steering. In order to achieve its aim, Sona Koyo Steering is investing continuously. Last year it invested Rs.50 crore to expand its capacity. For in-sourcing, pressure die-casting and adding balancing equipments in its plants, Sona Koyo Steering plans to invest Rs.100 crore. This will further enhance the production capacity of the company.

Widening Products Portfolio

Sona Koyo Steering is also engaging in widening its products portfolio to supply steering components to off-highway vehicles that include even golf carts. It is also planning steering components to commercial vehicles and farm equipment vehicles like tractors. Sona Koyo Steering possesses the technology to manufacture steering components to vehicles upto four tonnes weight. Beyond four tonnes, Sona Koyo Steering has to tie-up with other technological partners to supply the steering components.

Exiting From Fuji Autotech

One area the company failed was in acquiring a minority stake in Fuji Autotech of France in the year 2005. The purpose of the investment was not served. The investment did not give the desired leverage to Sona Koyo Steering and hence it is exiting from that venture now. Sona Koyo Steering is now trying to turn around the German subsidiary Sona Okegawa.

Good Investment At Low Price

Investors have an excellent opportunity to acquire the shares of a company which is the market leader in its segment at a very low cost of around Rs.11 per share. The investment will pay rich dividends in the medium and long term as the company Sona Koyo Steering has a good reputation and standing in the market.

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