Amtek Auto Limited

amtekAmtek 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.

Current Situation

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.

Why Invest?

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.

Price?

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.

4 Replies to “Amtek Auto Limited”

  1. Thanks Paras for sharing such valuable information and ideas. Do you still this it’s a turnaround story ? I have started following stock market for pure investment and such stories for long term. Keep writing such good articles

    Thank you !
    Neetu

      • Its hit lower circuit and gone down to single digit. Is the business is in doldrum? and looks like the company will close down. Your thoughts?

        • I believe the management has taken to long to take some concrete steps. Probably they were not getting the kind of valuations they were expecting for sale of assets/ subsidiaries. But again their lax leadership has a lot to blame for that as well. I understood that I got it wrong here and got out at a small loss. Turnaround stories don’t play out always and with Amtek I believe that is the case.

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