RANE MADRAS ( RML )
Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=1669
Printed Date: 21/Apr/2025 at 1:47pm
Topic: RANE MADRAS ( RML )
Posted By: valueman
Subject: RANE MADRAS ( RML )
Date Posted: 17/Mar/2008 at 8:00pm
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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 - 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 . ------------- To achieve satisfactory investment results is easier than most people realize ; to achieve superior results is harder than it looks . Benjamin Graham. |
Replies:
Posted By: Musketeer
Date Posted: 18/Mar/2008 at 3:06pm
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Could you let us know more about this?
The dividend yield is no doubt attractive.
How has the company fared in the last 4-5 years when there was a boom in the auto ancillary sector?
Is it the market leader in any of its products? Who are its main clients?
I feel things may have peaked out for the auto-ancillary sector but I could be wrong. Almost all the auto-ancillary cos. have reported sluggish growth recently. It seems to be the case with Rane Madras too (6% rise in y-o-y sales in Dec 2007) ------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: valueman
Date Posted: 18/Mar/2008 at 5:20pm
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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://%20saarthi.blogspot.com/2007/07/rane-madras-ltd-9500-rs.html - 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. ------------- To achieve satisfactory investment results is easier than most people realize ; to achieve superior results is harder than it looks . Benjamin Graham. |
Posted By: Vivek Sukhani
Date Posted: 18/Mar/2008 at 9:18am
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Looks decent on very count, man..... Rane is a group to be trusted, no doubts on that. Extremely conservative, but sets high standards.
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Posted By: Vivek Sukhani
Date Posted: 18/Mar/2008 at 9:20am
| Value, your first post sets an annualised EPS of approx 154.....is that okay? |
Posted By: valueman
Date Posted: 18/Mar/2008 at 10:07am
I just copy pasted it from a news item in capitalmarket.com so I do not know of the exact EPS .I am yet to do a good analysis of this company but last year or so Sanjoy Bhattacharya told in an investor conference that RML is a good investment and available cheaply .The wonderful dividend yield is an added bonus . I hope we can keep the developments on this scrip from time to time . ------------- To achieve satisfactory investment results is easier than most people realize ; to achieve superior results is harder than it looks . Benjamin Graham. |
Posted By: Mohan
Date Posted: 18/Mar/2008 at 10:11am
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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 ------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: Vivek Sukhani
Date Posted: 18/Mar/2008 at 10:25am
Even I thought so, but then when I also checked his P/e, that was also in fraction. I thought, there may be some extra-ordinary this time around....
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Posted By: Mohan
Date Posted: 18/Mar/2008 at 10:27am
You do seem to have an eye for analyzing numbers Vivek bhai. What is Extraordinary is Capital Markets. They still do not proof read. OR maybe its intentional .  ------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: Vivek Sukhani
Date Posted: 19/Mar/2008 at 12:21pm
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They were right man.
See, their eps for december quarter was 38.55. They annualised it, by multiplying it by 4, they got 154.2
However, this 38.55 was mainly on account of profit on sale of premises to the tune of nearly 54 crores.
Things dont look so great but still I got into this today.
Last year, they had roughly 40 bucks as book value.
This exceptional income means this stands roughly at 78 rupees, as the first 2 quarters are netting each other out.So, 40+38 is 78.
However, they are earning cash every quarter.
My bet is on the cash flows and distressed asset pricing.
People work out in details.....
Lets see, how it fans from here.
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Posted By: Mohan
Date Posted: 19/Mar/2008 at 12:35pm
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Got it Vivekbhai, IS is better to buy Rane Holdings ? The own majority from what it appears ?
------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: Vivek Sukhani
Date Posted: 19/Mar/2008 at 12:40pm
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Rane holdings I have to look at the Annual report in details now. I will get some tickets in rane holdings thanks to my holding Rane Brake.
Then only will it be possible to say something
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Posted By: Mohan
Date Posted: 19/Mar/2008 at 8:54am
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When is this one going XD ?
------------- Be fearful when others are greedy and be greedy when others are fearful. |