The share price of a small-cap auto ancillary stock held by Dolly Khanna and Vijay Kedia surged 18.6 percent to reach a new all-time high of ₹ 1038.80 apiece on the National Stock Exchange (NSE) after the company announced its result for the first quarter of the financial year 2023-24 and a stock split.
Talbros Automotive Components is an auto ancillary company that manufactures gaskets, heat shields, forgings, suspension systems, anti-vibration products and hoses. A few of its marquee customers include Bajaj Auto, Tata Cummins, Volvo Eicher India, Ashok Leyland, Escorts Group, Force Motors, Hero MotoCorp, Honda, Hyundai, Mahindra & Mahindra, Maruti Suzuki, Suzuki, Tata Motors, Simpsons, Carraro, Dana, Musashi, Spicer, GE and QH.
According to the latest shareholding pattern of the company, Dolly Khanna holds 1,85,715 shares or a 1.50 percent stake in the company while Vijay Kedia holds 1,50,000 shares or a 1.22 percent stake in the company.
Result
The company’s profit after tax increased by 46 percent to ₹ 17.41 crores in the April to June quarter (Q1FY24), compared to ₹ 11.90 crores in the corresponding quarter of the previous year (Q1FY23). Its revenue grew by 20 percent to 185.3 crores in Q1FY24, compared to ₹ 154.70 crore in Q1FY23.
“Over and above the orders received last year of Rs ~1000 cr, the momentum of winning orders continue with receipt of orders worth ~Rs. 400 crores from both, domestic and overseas customers across its business divisions, product segments and JVs. These orders are to be executed over a period of next 5-7 years covering the company’s product lines — gaskets, heat shields, forgings and chassis. Of this, “Rs 215 crores is received from a leading established export OEM for the Electric Vehicles (EV),” said Anuj Talwar, Jt. Managing Director, Talbros Automotive Components.
Stock Split
The company’s board has also approved a stock split or the sub-division of its equity shares in the ratio of 1:5, subject to the approval of its shareholders. Therefore, each share having a face value of ₹ 10 will be divided into five equity shares having a face value of ₹ 2 each. The record date for the same will be decided in due course.
The rationale behind the split is to enhance trading activity and liquidity of the company’s shares, to encourage the participation of small investors by making equity its shares more attractive to invest due to increased volume on account of a larger free float and lowered price per share. The split is expected to be completed within two months from the date of approval of the shareholders of the company.
Multibagger
The company’s share price has risen by 101.20 percent in the past year to deliver multibagger returns. Therefore, if an investor had invested ₹ 1 lakh in the company’s shares a year ago, the value of their holdings would have been ₹ 2.01 lakh today!
With a market capitalization of ₹ 1,081 crores, Talbros Automotive Components is a small-cap company. It has an ideal return on equity of 16.60 percent and an ideal debt-to-equity ratio of 0.24. Its shares were trading at a price-to-earnings ratio (P/E) of 19.46, which is lower than the industry P/E of 45.20, indicating that the stock might be undervalued as compared to its peers.
The company’s promoters hold a 58.42 percent stake in it, followed by retail investors with 41.56 percent and domestic institutional investors with 0.02 percent stake in the company.
Written by Simran Bafna
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