Equity Watch

We begin the Year 2008 with Clutch Auto

Clutch Auto a 36 years young manufacturer of 500 different types of clutch discs and assemblies ranging from sizes of 160-420 mm has 60 % of the Indian market.It is an OEM supplier to Maruti, M& M ,Tata Motors, Eicher, Mazda,PTL,Bajaj,Escorts,BEML and to ordinance factories for Military tanks. Clutch Auto produces over 20 lakh clutches  every year. Its an R & D driven organisation with 16 patents as of date in India and USA to its credit..Clutch Auto acquired clutch divison of Pioneer Inc,in US to strengthen its position in US market.Supplying to Pioneer’s clients with the Pioneer brand name which will further help the company to penetrate easily in US markets. Its QS 9000 certified company with factories in Delhi and Haridwar.In Delhi the factory is located in NCR region on Mathura Road on a plot of 30,000 sq. meters.Company’s Financials on YOY basis are showing more than 50 % growth in both top and bottom lines.

Scrip Code : 505052    Company Name : Clutch Auto Ltd

Type UnAudited UnAudited UnAudited UnAudited
Date Begin 01 Apr 06 01 Apr 05 01 Apr 04 01 Apr 03
Date End 31 Mar 07 31 Mar 06 31 Mar 05 31 Mar 04
Description Value(Rs. million)
Net Sales 2355.02 1493.16 927.46 730.62
Other Income 0.87 1.03 34.97 28.25
Total Income 2355.89 1494.19 962.43 758.87
Expenditure -1952.62 -1256.43 -790.6 -653.98
Operating Profit 403.27 237.75 171.83 104.89
Interest -94.74 -60.06 -51.71 -58.09
Gross Profit 308.53 177.69 120.12 46.8
Depreciation -51.55 -47.05 -44.8 -42.39
Profit before Tax 256.98 130.64 75.32 4.41
Tax -41.76 -4 -15 -6.73
Profit after Tax 215.22 126.64 60.32 -2.32
Net Profit 215.22 126.64 60.32 -2.32
Equity Capital 155.15 139.95 88.15 88.15
Reserves 772.34 246.58 123.21 287.27
Forex earnings/Exports 501.1 480.06 234.68
EPS 13.87 9.05 6.84
Nos. of Shares – Non Promoters 11944495 11196495 6011607 5480137
Percent of Shares – Non Promoters 76.99 80.01 68.21 62.17
Result Type A A A A
  Notes Notes Notes


Financials reproduced from BSEINDIA 

Clutch Auto reported a 11% rise in net sales for Q2FY08, over Q1FY08  mainly supported by rising sales from domestic market. It achieved net sales of Rs 50.4 crore, with domestic sales contributing Rs 40 crores (up 14 %) and export sales of Rs 10 crore (up 2 %). Net profit growth was restricted to 7.7% due to higher interest outgo. The company reported net profit of about Rs.4 crore, translating into an EPS of Rs 2.5 for Q2 on diluted equity of Rs 16.3 crore.During the last quarter Q1FY08 , 800,000 equity shares were allotted on conversion of warrants on preferential basis, increasing equity capital to Rs16.3 Crore.The company is planning to manufacture some of its products from its new plant at Haridwar (Uttaranchal), which attracts tax benefits.The company is trying to enter into A and B segment vehicles. It also plans to focus on exports especially to US and this is expected to pick up in coming months.

At CMP of Rs.115 Co’s mkt cap. is less than Rs.190 crores.With the new factory at Haridwar getting commissioned, there is a distinct possibility that the Co. may sell its factory land on the periphery of New Delhi and get compensation in excess of its present market cap.. By relocating the entire factory to Haridwar the Co.will avail of tax benefits in addition to nil interest outgo .This will improve the bottomline atleast two fold.One can expect an EPS of Rs.25 in the next 2 years and a share price of Rs. 250 in LT.

Buy at CMP of Rs. 115 with 2 years HOLD is recommended .

This report has been prepared solely for information purposes and the information contained herein may not be deemed to be an investment advice. Such information is impersonal and not tailored to the investment needs of any specific person. The information contained herein is not a complete analysis of every material fact representing any company, industry or security. The views expressed may change. While the information contained herein has been obtained from sources believed to be reliable, no responsibility (or liability) is accepted for the accuracy of its contents. Investors are advised to satisfy themselves before making any investments and should consult with and rely upon their own advisors whether and how to use such information in making any investment decision. Neither the author nor his firm accepts any liability arising out of use of the above information





4 thoughts on “We begin the Year 2008 with Clutch Auto

  1. Sujeet says:

    There are some negatives that could, according to me, hold the price of this stock at current levels for quite some time (around 80-120 range). Some of them are:
    – 2007 results are not so great. Net profit has been stagnant, in line with rest of the peers in the auto anc. sector.
    – Stronger rupee could hit them on their exports (whatever little exports they do).
    – As long as domestic interest rates stay high, the domestic story would not be applicable to them.
    – Constant dilution of equity will keep the EPS down.
    – What if they dont sell the land that they are expected to?
    Actually last year, I too got carried away by their rosy story. But luckily bailed myself out right in time, with HUGE profits on this..Somehow, feel scary to buy this. Are u sure the company is well managed? I feel Sona Koyo is better story than clutch..Pl. share your views on this..


  2. youknow says:

    So, any comment that gives negative on your view, is being removed from here. So u r no different from those vested brokers and brokerages, misleading retailers…:)


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