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Wednesday, October 05, 2011

Bharat Gears: Value Buy at these prices.

Bharat Gears:
CMP: 46.75
Market Cap: 35.69Cr
Debt: 58.14Cr
Sales TTM: 361.45Cr
PBDIT TTM: 34.31Cr
Net Profit TTM: 10.24Cr
6 yrs Avg Cash Flows from Operations:  +ve 24.28Cr

Bharat Gears Limited (BGL) is india's largest gear manufacturer  (I think its the largest gear manufacturer for Commercial vehicles, Farm machines and Construction equipment) . Bharat Gears manufacturers a wide range of Ring Gears and Pinions, Transmission Gears and Shafts, Differential Gears, Gear Boxes.

Bharat Gears has 3 divisions: Gears, Furnace and Automotive components.

Clients for Gears and Automotive components include: Ashok Leyland, Godrej, Mahindra & Mahindra, Tata Motors, Axles India, Hero Motors, Mahindra Sona, GE Aviation, Carraro-India, Italy, China, Hindustan Hardy Spicer, New Holland Fiat India Ltd, Toyota Kirloskar Auto Parts, CLAAS-India, France,  Hyva India, Paharpur Cooling Towers, Transaxle Manufacturing of America, Dana Corporation USA, JCB India, SAME Deutz - Fahr, Voltas, Eaton USA, JDCW USA, Spicer India, ZF China, Elgi Equipments, JDEPL India, Swaraj Mazda, Agriking Tractors and Equipments, Escorts, John Deer Iberica, Spain, TAFE.

BGL Furnaces engineers and constructs batch and continuous heat-treating furnace systems in technical association with AFC-Holcroft, Michigan, USA.

More than 110 BGL-AFC-HOLCROFT heat treating furnace systems are in service at several customers' plants in India, including Ashok Leyland, Automotive Axles, Bajaj Auto, Ceekay Daikin, Endurance, Fairfield, Greaves, Hindustan Motors, Mahindra & Mahindra, Mukand, National Engineering Industries, Precision Fasteners, Premier Automobiles, Raunaq Auto, Sona Koyo Steering, Sundaram Fasteners, TATA-Timken, TELCO, Tractor Engineers and Varroc.

Company has redeemed 1Cr worth of preferential equity which had 10% interest rate. Bharat Gears also has "leased" some of its manufacturing equipment with estimated lease obligation of 9.65 cr (last year 5.08Cr) and one year lease payment due of 2.49Cr (last year 1.56Cr) This is interesting cause this is the model being used by "Telecom players" and I must say it should be beneficial for Bharat Gears.

There are expansion plans with a new plant at Satara but I think it will take a year or more for it to really start building (right now land has been purchased)

Conclusions: Bharat Gear seems to be cheap.. its market cap of 35.69Cr is equal to 34.31Cr  PBDIT for year ending March 2011. It has also been reporting consistent +ve cash flows. Leasing of equipment seems to be working for Bharat Gears and looks like it is going to drive the growth as Bharat Gears can get latest equipment at a  fraction of cost and service the demands of the customers.. Its target automotive segment is: commercial vehicles, farm machines and construction equipment which are all growth areas for a growing economy like India. I would expect Bharat Gears to close the year with 400Cr or more of sales. Dec and March are the most profitable quarters.

Company Website
Bhart Gears Annual Report 2011:
Bhart Gears Annual Report 2010:
Bhart Gears Annual Report 2009:
Bhart Gears Annual Report 2008:

1 comment:

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