Sunday, August 14, 2011

Buy Lloyd Electric & Engineering - A potential multibagger

InvestorZclub has been keeping a close watch on the company's performance and price movement since past 10 months when the promoters started buying the shares of the company from open market.
The article titled Lloyd Electric & Engineering - Promoters buying from open market  contains the details on date, quantity and pricing about the shares bought by the promoters in Nov 2010.

Now in the month of August 2011 the promoters have again started buying the company's share from open market and has bought over 3.1 lakh shares (0.5%) till 12th Aug 2011. The percentage of shareholding of the promoter as on June 2011 was 37.20% but as per the latest disclosure document submitted to NSE the shareholding of the promoters has gone up to 37.71%.

Also for Q1 FY2011-2012 the company has done reasonably well and has reported a jump of 19% on revenue at Rs 252 crore versus Rs 212 crore. Its total expenditure was up 20% at Rs 231 crore versus Rs 193 crore. EBITDA was up 14% at Rs 25 crore versus Rs 22 crore. PAT however was down 8% at Rs 11 crore versus Rs 12 crore because of higher interest cost.

The company has also declared dividend at 15% for this year, a 50% jump over dividend declared last year.
At the current market price of Rs. 52 the company is trading at very attractive valuation of less than 4 times PE multiple and 0.3 time Price to book multiple based on the expected FY-12 numbers. The article titled Lloyd electric results and valuation contains detailed financials and valuation analysis of the company.
To summarize following are the points which makes us bullish on the stock:
1. Promoters regularly buying from the open market and increasing their stake, which should provide support to the stock price.

2. Extremely low valuation of less than 4 times PE multiple and 0.3 times PBV multiple.

3. 50% increase in dividend payout for this year.

4. Growing sales and EBIDTA.

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