Amtek Auto Limited (AAL) is part of Amtek Group which is headquartered in India and is one of the largest integrated auto component manufacturers in India with a strong global presence. It has also become one of the world’s largest global forging and integrated machining companies. The Group has operations across Forging, Iron and Aluminium Casting, Machining and Sub-Assemblies. It has world-class facilities across India, Japan, Thailand, Germany, Hungary, Italy, Romania, UK, Brazil, Mexico and US. The Amtek Group is comprised of corporate entities Amtek Auto, JMT Auto, Amtek Global Technologies and other subsidiaries and associates. With the infrastructure and technology platform developed over 25 years, the Group is well positioned in the Indian Auto and Non-Auto component markets.
AAL has run into a debt spiral by buying businesses across the world thereby exhausting all the reserves that they had accumulated over the years and also excessively leveraging their balance sheet. They have close to Rs. 14,000 Cr. of outstanding debt. AAL has posted loss in Q2 and Q3 of FY 2016.
The company has good global businesses that are profitable. The valuation of those businesses is enough to clear all the outstanding debt of the company. I believe it is just a matter of time they sell part of their foreign businesses thereby deleveraging the balance sheet.
The current market price of the AAL is Rs. 34.25 and the market cap is around Rs. 765 Cr. A company with annual sales of around Rs. 15,000 Cr. of sales is available at a very low valuation. The presence of hard liquid assets is what gives me comfort here.