Auto industry is one of the fastest growing sector in India.Many foreign companies considering India as a main market as well as a production hub for their international operations.Auto component industry is also moving in tandem .Pune based Kalyani Forge is a well managed company manufacturing forged components for auto industry. It is manufacturing high quality close tolerance die forgings in a wide range from 0.1kg to10kgs.Company is making Engine Parts,Transmission parts, Steering Parts..etc Almost all major auto producers are in the customer list of Kalyani forge which includes Ashok Leyland,Tata Motors,M&M,TVS Motor Company,Hero Motocorp..etc.Company also supplying its products to international customers like RENAULT SAS, LOMBARDINI S.R.L, VCST DE MEXICO..etc .In recent times company is moving out of low margin products and concentrating in niche high margin forgings segment.Effect of this shift is visible in recent financial performance.Company is also planning to reduce its debt.For the nine month ended December 2011,Company posted a sales of Rs.206 Cr v/s Rs.168 Cr and a net profit of Rs.11.5 Cr v/s Rs.5 Cr .For the full year March 2012, company is expected to post an EPS above Rs.42 (last year Rs.18). Considering company’s future plans and the vast opportunity available in this segment ,trading at a P/E multiple of just 4 on expected full year EPS ,Kalyani forge is a good BUY at CMP of Rs.177/-. Stock is trading both in NSE and BSE.
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