RANE MADRAS ( RML )  


Rane Madras (RANEMADRAS), part of the Rane group, is a manufacturer of steering and suspension systems.

The company manufactures manual steering gears including re-circulating ball type and rack and pinion; steering linkages including tie rod assemblies, drag link assemblies, center link assemblies, and gear shift ball joints; and suspension linkages including lower control arms, lower and upper suspension ball joints, inner and outer ball joints, and axle ball joints.
http://www.capitalmarket.com/cmedit/story2-0.asp?sno=226192

Rane Madras surged 9.83% to Rs 65.90 at 14.29 IST on BSE after company declared an interim dividend of Rs 6 per share for the year ending 31 March 2008.

The dividend yield based on the current market price of Rs 65.90, works out 9.1%. Dividend is tax free in the hands of shareholders even as companies are required to pay a dividend distribution tax.


The scrip had touched a high of Rs 66.45 and a low of Rs 56 so far during the day. The stock had hit a 52-week high of Rs 112.95 on 10 April 2007 and a 52-week low of Rs 55.50 on 7 March 2008.

The scrip had underperformed the market in the one month to 14 March 2008, falling 13.54% as against the Sensex's 11.29% fall. It had also underperformed the market in the past three months, slipping 31.51% against the Sensex's 21.32% slide.

The small-cap auto ancillary has an equity capital of Rs 10.16 crore. Face value per share is Rs 10.

At the current price of Rs 65.90, the scrip trades at a PE multiple of 0.42, based on Q3 December 2007 annualised EPS of Rs 154.45.

( Note : I have just copy pasted from the above source and the EPS figures given there is the same 154.45 .It needs to be verified )

The net profit of Rane Madras rose 1194.7% to Rs 39.23 crore on 6.4% rise in sales to Rs 89.91 crore in Q3 December 2007 over Q3 December 2006.


Note : I have recently bought this stock purely for its excellent dividend yields and also with the hope that Auto Ancillary Companies like RML have a great future .The current market correction gave me an opportunity to enter the same and the excellent dividend acts as a shock absorber . Others are requested to do their own homework before investing .


Edited by valueman - 18/Mar/2008 at 10:26am

Dear Musketeer

I invested in RML Primarily for its dividend yield and next for the growth of Auto Ancillary sector .

Here is a write up of Rane Madras from another blog :
 http://saarthi.blogspot.com/2007/07/rane-madras-ltd-9500-rs.html

Established in 1960, Rane Madras Ltd (RML) is part of the well known Rane group - which is the undisputed leader of South India in auto components with companies like Rane Brakes, Rane engines, KAR Mobiles, Rane NSK Steering etc. Accordingly, RML is also a market leader in manufacturing of critical automotive components like steering linkages, ball joints, axial joints, suspension joints and manual steering gears. Company has broadly divided its product profile into two segments namely a) steering & suspension linkage products and b) manual steering gear products. It is a preferred supplier to most of the OEM’s in India and caters to every segment of automobile industry viz. passenger cars, multi utility vehicles, light commercial vehicles, heavy commercial vehicles and farm tractors. Importantly, it has strategic technical partnerships with M/s TRW Inc, USA for steering gear products & TRW Ehrenreich GmbH, Germany for steering linkage products.

Earlier RML was operating thru three plant one each in Chennai, Pondichery & Mysore with a combined capacity of 10.5 million units for linkage products and 0.6 million units for steering gears. But recently it has established a new facility in Varanavasi, Chennai for producing outer ball joints with an investment of 14 crore. This unit commenced operation only in Oct 2006 and will be primarily catering to export market with an installed capacity of 5.65 million ball joints. Presently, products are being exported to US, Mexico, Japan, Thailand and some European countries. It also supplies to SAARC countries for after-market segment. For future growth, RML is focusing more on global market and intends to take up its export share to 25% from 18% currently. The company has also set up a manufacturing facility at Integral Industrial Estate, Uttrakand for supply of steering gears exclusively to Tata Motors Limited. It is also contemplating to increase the product range to include hydrostatic steering gear for farm tractors and rack and pinion steering gears.

Off late, for better management and consolidation, Rane group has been taking various initiatives and implementing restructuring for all its group companies. Accordingly, in RML the individual promoters have transferred their shares in the company to Rane Holdings Ltd. With this, the shareholding of Rane Holdings in the company has increased from 20.00% to 51.28%, thus, making RML its subsidiary with effect from March 2007. Financially for FY07, it recorded 20% growth in net sales to 330 cr whereas NP jumped up 60% to 13.60 cr registering an EPS of 13.50 Rs on equity of 10 cr. Against this it gave 40% dividend for full year. For FY08 it is estimated to clock a turnover of 400 cr and PAT of 15 cr i.e. EPs of 15 Rs. Investor can consider taking some exposure as scrip has the potential to give 25~30% return in 9~12 months.






Edited by valueman - 18/Mar/2008 at 10:27am

Value, your first post sets an annualised EPS of approx 154.....is that okay?

Original EPS of Rs 154.00 seems like a typo.
Probably should read as Rs 15.4.

Would recommend Valueman to mention source of article for copyright purposes in his post.
THanks


Edited by Mohan - 18/Mar/2008 at 10:13am