Fundamental Stock

ACTION CONSTRUCTION EQUIPMENT LIMITED - Equity Research Report
DATE: 17/02/2018
  • COMPANY NAME: ACTION CONSTRUCTION EQUIPMENT LIMITED
  • BSE CODE: 532762
  • NSE CODE: ACE
  • SECTOR: ENGINEERING HEAVY
  • BUY: 165 TO 184 Rs
  • TARGET: 250 Rs
  • MARKET CAPITAL: 2161 Cr.
  • FACE VALUE: 2
  • 52 WEEK HIGH/LOW: 40/204
  • BOOK VALUE: 22.55
  • DIVIDEND YIELD(%): 15 %
  • SHARE PLEDGE : 4 %
  • CURRENT PRICE/EARNING (TTM): 56
  • TTM EPS: 3.29
  • PRICE TO BOOK VALUE: 8.17
  • DESCRIPTION:

     

    Recommendation - Buy between 165 to 184 Rs

    Hold for 1 years

    Target: 250 Rs.

     

    Part – 1 Company’s Information:

    • Established in the year 1995 and operating in engineering sector.
    • Action Construction Equipment Limited is the leading mobile crane manufacturing company in India
    • ACTION CONSTRUCTION EQUIPMENT LIMITED (ACE) is India’s leading material handling and construction equipment manufacturing company with a majority market share in Mobile Cranes and Tower Cranes segment.
    • In addition to Mobile Cranes, ACE also offers Mobile/Fixed Tower Cranes, Crawler Cranes, Truck Mounted Cranes, Lorry Loaders, Backhoe Loaders/Loaders, Vibratory Rollers, Forklifts, Tractors & Harvesters and other Construction Equipment
    • ACE equipment is being successfully used in many industrial sectors like infrastructure, construction, roads, engineering industry, coal mines, chemical and fertilizer plants, power stations, ports, heavy project engineering industry, railways, cement industry, oil industry, defence etc.
    • ISO 9OOI Certified company

     

    Part – 2 Company’s Subsidiaries Company Information:

     The Company is having

    1. Frestel Limited, Cyprus – Wholly owned subsidiary.
    2. SC Forma SA,Romania – Fellow subsidiary

     

    Part – 3 Company’s Manufacturing Details:

    • ACE has full-fledged state of the art production facilities based at industrial townships of Faridabad (Haryana), Kashipur (Uttrakhand).
    • These Plants are fully equipped to produce around 12000 Construction Equipment and 9000 Tractors.

     

    Part – 4 Company’s Divident History:

     

    Dividend Declared

    Announcement

    Effective

    Dividend

    Dividend

    Remarks

    Date

    Date

    Type

    (%)

     

    23/05/2017

    20/09/2017

    Final

    15

    Rs.0.3000 per share(15%)Final Dividend

    09/03/2016

    22/03/2016

    Interim

    10

    Rs.0.2000 per share(10%)Interim Dividend

    01/06/2015

    15/09/2015

    Final

    10

    Rs.0.2000 per share(10%)Dividend

    21/05/2014

    23/07/2014

    Final

    5

    Rs.0.1000 per share(5%)Dividend

    27/05/2013

    14/08/2013

    Final

    10

    Rs.0.2000 per share(10%)Dividend

    06/08/2012

    21/09/2012

    Final

    10

    Rs.0.20 per share(10%)Dividend

    31/05/2011

    14/09/2011

    Final

    50

    Rs.1.00 per share(50%)Final Dividend

    01/02/2011

    11/02/2011

    Interim

    50

    -

    01/04/2010

    12/04/2010

    Interim

    50

    -

    28/05/2009

    30/07/2009

    Final

    20

    -

    21/05/2008

    29/07/2008

    Final

    20

    AGM

    14/01/2008

    29/01/2008

    Interim

    20

    -

    30/05/2007

    02/08/2007

    Final

    30

    AGM

     

     

    Part – 5 Action Construction Equipment Limited - Shareholding Pattern:

     

     

     

    Part – 6 Financial Focus:

    Focus on - Financial Results March 2017:

    • During 2016-17, the turnover of the Company was 77551 Lakhs against 65005 Lakhs during FY 2015-16 registering an increase of around 19.3%.
    • The Profit after Tax during FY 2016-17 is 1964 Lakhs crore against 881 Lakhs in FY 2015-16 registering an increase of around 123%.

     

    Focus on - Financial Results December quarter 2017:

    • For the quarter ended 31-12-2017, the company has reported a Standalone sales of Rs 279.08 Crore, up 40.95 % from last year same quarter Sales of Rs 197.99 Crore
    • Company has reported net profit after tax of Rs 26.41 Crore in latest quarter compare to last year December 2016 quarter profit 4.83 Cr. up 239%.

     

    Part – 7 Action Construction Equipment Limited – Risk

     

    • Resources Risk
    • Risk from competiton
    • Risk from suppliers
    • Ability to pass on increasing cost
    • Continued economic growth
    • Foreign currency risk
    • Cyclic nature of the Industry

     

    Investment Rational:

    1. Company improvement in profit from last 3 years
    2. Debt has been reduced
    3. The government’s focus on slew of recent initiative like make in India, smart city, railways, irrigation, highway projects, rural and urban development, affordable housing projects, housing to all by 2022,focusing on improving rural infrastructure will makes opportunity growth in sale margin.
    4. Growing public and private infrastructure, FDI reforms for construction sector, highway projects and growing economy has led to the overall surge of construction equipment market in India
    5. India’s construction equipment market is projected to reach 131 thousand unit by 2022.
    6. Several construction projects are in pipeline which helps to increase the demand of construction vehicle.
    7. The union budget for FY2018 has allocated for infrastructure development Rs 396135 Crore being 14% increase compared to last year.
    8. Proposed change for affordable housing and overall for the entire real estate sector will have a positive multiplier effect on many other including ACE tower crane
    9. The earth moving and construction equipment (ECE) industry is back on track which is driven by roads and highway sector
    10. The demand for construction equipment is likely to rise as a result of growth in traditional end user industries like construction and mining. Thus ACE can tap this market.

     

     

     

    Recommendation:

    • Actually company P/E is running higher and promoter stack has reduced by 4% seems ok. Due to company good quarter to quarter performance and by looking company future prospective growth due to government lots of initiative, I am suspecting stock may touch 250 Rs within year.

     

     

     

    Please note:

    • Note: The articles are not research reports but assimilation of information available on public domain and it should not be treated as a research report.

      Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

      Disclosure: It is safe to assume that I might have the discussed companies in my portfolio and hence my point of view can be biased. Readers should consult registered consultants before making any investments.

     

Lights