Buy Force Motors Ltd For Target Rs.1,625 - Sushil Finance
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Force Motors Ltd. (FML) recently announced its performance for the quarter ended March 31, 2021. The FY22 turnover was above estimate while the profits were down primarily because of capitalization of expenses. Following are the key highlights.
Other Updates
During Q4 FY22 & FY22, the company capitalized expenses to the tune of Rs.25.0 cr and Rs.82.8 cr, respectively
During the fiscal ended March 31, 2022, the company incurred a capex of Rs.407.2 cr
As on March 31, 2022, the consolidated debt on the books stood at Rs.1,068.8 cr (as against Rs.523.8 cr on March 31, 2021) – the short term borrowings have gone up from Rs.30 cr to Rs.468.3 cr during the year.
During the fiscal, the Property, Plant & Equipment have gone up from Rs.1,012.7 cr to Rs.1,568.9 cr – the capital work-in-progress have reduced from Rs.368.7 cr to Rs.155.7 cr on March 31, 2022.
During April, 2022, the company sold 664 SCVs & LCVs and 657 UVs & SUVs as against 572 SCVs & LCVs and 522 UVs & SUVs in the domestic market. Further, in overseas markets, the company sold 85 SCVs & LCVs and zero UVs & SUVs as against 182 SCVs & LCVs and 5 Uvs & SUVs
During May, 2022, the company sold 1,041 SCVs & LCVs and 668 UVs & SUVs as against 916 SCVs & LCVs and 390 UVs & SUVs in the domestic market. Further, in overseas markets, the company sold 317 SCVs & LCVs and zero UVs & SUVs as against 0 SCVs & LCVs and 154 UVs and SUVs.
OUTLOOK AND VALUATION
FML is a leading auto OEM and auto-ancillary company – in the OEM space, the company has carved out its own niche particularly with Traveller which commands more than 60% share in its market. The ancillary business also enjoys exclusive associations with globally renowned players like BMW, Mercedes and Rolls Royce. The company has been investing into new products and capacities and is ready to launch its first electric vehicle. The company is backed by strong pedigree of promoters and the stock is backed by robust fundamentals – good liquidity, moderate debt-equity, healthy cash flow, etc. We have introduced FY24 to our model and expect company to deliver an EPS of Rs.95.6 in FY24 and we revise our target price to Rs.1,625 (17x of FY24-E EPS) for the stock with an investment horizon of 18-24 months.
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