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Munjal Showa Limited in its joint venture with Showa Corporation (whose equity stake is 26%), designs and manufacturers shock absorbers and struts for leading two-wheelers and four-wheelers. The Munjal Showa manufacturing plant is spread over an area of 24075 sq mt in the industrial area of Gurgaon, Haryana, on the outskirts of the National Capital Territory of Delhi, India.
.Munjal Showa products serve as original equipment to a wide range of Maruti Suzuki upper end cars and export models, Honda City car, complete range of Hero Honda Motorcycles, Kawasaki Bajaj Motorcycles, and Hero range of mini-motorcycles and mopeds and Honda Motorcycles and Scooters India (Pvt) Limited. In over a decade the Company's state-of-the-art Shock Absorbers, Front Fork, Struts and Window Balancers/Gas Springs have become symbols of reliability and quality for popular two and four wheeled vehicles.
September 2013 quarter results
For the quarter ended September 2013, sales fell 2% to Rs 366.57 crore. OPM fell from 6.3% to 4.9% which resulted in OP falling 23% to Rs 17.95 crore.
Other income jumped from Rs 51 lakh to Rs 84 lakh and interest cost fell 54% to Rs 80 lakh. After providing for depreciation (up 8% to Rs 7.09 crore), PBT fell 30% to Rs 10.90 crore.
EO loss was NIL against Rs 6.14 crore, after which PBT after EO grew 14% to Rs 10.90 crore.
Provision for tax jumped 83% to Rs 1.31 crore after which PAT grew 9% to Rs 9.58 crore.
Six months results
For the six month ended September 2013, sales fell 4% to Rs 765.37 crore. OPM improved from 5.9% to 6.0% which resulted in OP falling 2% to Rs 45.58 crore.
Other income jumped from Rs 1.02 crore to Rs 4.47 crore and interest cost fell 52% to Rs 1.72 crore. After providing for depreciation (Rs 14.49 crore, up 10%), PBT grew 10% to Rs 33.85 crore.
EO loss was NIL against Rs 6.14 crore, after which PBT after EO grew 37% to Rs 33.85 crore.
Provision for tax jumped 94% to Rs 4.62 crore after which PAT grew 31% to Rs 29.23 crore.
Rs 5.47 crore provided for wage settlement for the half year
During the six months ended September 2013, the company has provided Rs 5.47 crore for wage settlement agreement and staff increment. The management is currently negotiating and internal discussions are going on. The management is confident that subsequent adjustment, if any, is not likely to be material.
Encouraging outlook
Its existing customers have assured to meet predetermined sales targets with around 10 per cent growth, with the support of new models likely to be launched both in 2 Wheeler and 4 Wheeler segment and export in the coming year i.e.2013-14.
They have planned major initiative to boost the industry sentiments and accelerate growth in the year 2013-14 mainly through new launches, campaigns, capacity addition and network expansion and a significant step working toward their global vision. In nutshell, all customers of the company are on growth path and company is confident to meet their increased demand.
Good monsoon has already led to revival in demand for two-wheelers and Munjal Showa is a key supplier of components for two-wheelers. Its main clients Honda Motorcycles and Hero Motocorp, both are on the growth path in domestic market as well as have substantial export plans.
Valuation
The share currently trades at Rs 64.
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