PPAP Automotive Ltd | Auto Ancillaries Sector | 2019 Multibagger shares to invest in Indian Stock Market

Looking for a long term small cap value pick in Auto ancillary sector? PPAP India is one of the small company in this sector which is performing very well. Another good company in Auto ancillary sector analyzed by us is Wabco India Ltd, check it out. Looking for more value companies, please see top 5 Indian shares to invest now!!

Here is a detailed analysis of Wabco India Ltd. You can read more below:

About the company

BSE: 532934

NSE: PPAP
ISIN: INE095I01015
SECTOR: Auto Ancillaries

PPAP Automotive Limited manufactures automotive sealing systems, and interior and exterior automotive parts in India. The Company offers polymer extrusion-based automotive sealing system and injection-molded products.  It has injection molding machines, ranging from 60 tons to 2500 tons. The Company's manufacturing facilities are located in Noida (Uttar Pradesh), Greater Noida (Uttar Pradesh), Chennai (Tamil Nadu) and Pathredi (Rajasthan).

Major products

The Company's automotive sealing system product range includes outer belt molding (black type/bright type), inner belt molding, windshield molding, roof molding, quarter window molding, air spoiler, a-pillar garnish, b-pillar garnish, bodyside protector, skirt air damper and slide rail system. The Company also manufactures interior and exterior Injection molded products, such as door trims, interior pillars, rear parcel shelf, trunk linings, and fender Inner.

Client Engagements

PPAP was started with the production of Maruti and Maruti Suzuki India Limited remains its major client. Other clients are Hyundai Motors India Limited, Ford India Limited, Tata Motors Limited, Mahindra and Mahindra Limited, Honda Cars India Limited, Renault Nissan, and many more.

Positive indicators

• The company's automotive products were used in 72% of total passenger vehicles (PV) produced at 8.87 lacs in India in Q3FY18-19.
• Maruti Suzuki accounts for 49% of its sales.
• Honda accounts for 28% of the company's topline growth.
• 98% of sales from Passenger Vehicle.

Opportunities

• With the growth of the Indian middle class, the passenger vehicle market is bound to show boom. 
• Growth in the auto industry will increase demand for sealing products.
• No matter what kind of changes comes to core Auto technologies, the sealant product will be in demand.

Risk

• Its business is tied with Maruti-Suzuki business as Maruti Suzuki is the largest client of the company. The company should diversify its business.
• It is a very small company and it is important to keep a watch on the management decision on how they expand the business.

The expected range of price

Share bought around INR 220-230 in Q3 2018-2019 should be around INR 450-550 in next 18-24 months.

Disclaimer: This is not an advice or recommendation to buy the stock. The illustration is for educational purpose only. Please check with your investment advisor before investing. Please read the detailed disclaimer below.

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Havells India Ltd | Electric Equipment Sector | 2019 Multibagger shares to invest in Indian Stock Market

BSE: 517374
NSE: HAVELLS
ISIN: INE176B01034
SECTOR: Electric Equipment

Here is a detailed analysis of Havells India Ltd. You can read more below:

About the company

Havells India Limited is an FMEG (Fast Moving Electrical Goods ) Company and is basically a holding company. The Company is engaged in manufacturing Switchgears, Cable, Lighting and Fixtures, and Electric Consumer Durables. It has a simple strategy to acquire and grow, which is the key to its success.
It is ranked 11th ‘Most Respected Company’ out of the top 100 companies in India- Business World.

Major products

• Consumer: Havells products for consumer ranges from lighting, switches, electrical circuitry and wiring to home & kitchen appliances, fans, air coolers, and water heaters.
• Industrial: Havell offers a range of industrial electrical solutions from circuit protection and surge protection devices, reactive power solutions, HT & LT cables, induction motors, to professional lighting and heavy-duty fans etc.
• Additional Products under brand LLoyd: Havells India acquired Lloyd brand in 2017 and now has additional products in its portfolio such as Air Conditioner, Washing Machine, LED Television, Chest Freezer.

Positive indicators

• The company has consistently performed in the last 15 years with 29% CAGR growth in revenue and 32% CAGR growth in profit. It is a very good indication.
• The recent acquisition of Lloyd is an indication that the company is looking to expand its business in high-growth consumer electrical appliances.

Opportunities

• With the growth of the Indian middle class and government's focus on 100% electrification of Indian villages, the electric parts and equipment market is bound to grow at a fast pace. 
• Only 3% of Indian household is actively using high-end consumer appliances. With the growth in the Indian middle-class income, more Air Conditioner and home appliances will be used by Indian households.
• Government is focusing on "housing for all" scheme and promoting more real estate activities. This will create demand for electrical switches, wires etc.

Risk

• The economic slowdown and risk related to the real estate market can have an indirect impact on sales.
• Due to non-brand awareness, price competition, and high input cost; penetration to B-Class cities and the rural area remains a challenge for all big brands.

The expected range of price

Share bought around INR 500-550 should be around INR 800-900 in the next 18-24 months.

Disclaimer: This is not an advice or recommendation to buy the stock. The illustration is for educational purpose only. Please check with your investment advisor before investing. Please read the detailed disclaimer below.

Read More