to r ’s Focus

Inves -Madhukar Das

Issue 14, Vol 1

Omax Autos
-May 13, 2011
The Indian stock market has been on a sluggish mode despite the better than expected IIP
numbers and easing food inflation. However the state assembly election results brought some
cheer amongst the traders as Sensex rose handsomely along with broader indices trading in Other Picks
green. The outlook still remains cautious as these positive cues can easily be overshadowed
by global economic and financial concerns. BUY :
Fundamentally Speaking Arvind Ltd.
The auto ancillary industry in is one of the sunrise sectors in India with promising growth CMP—`70
prospects. Omax Autos Ltd is one of the well known Auto Ancillaries engaged in the busi-
ness of manufacturing auto components for 2-wheeler and 4-wheeler manufacturers in India Target—`77.5
and abroad. Over the years it has grown stronger and has 7 manufacturing facilities located
across India. It has facilities to fabricate sheet metal, machined tubular, and electroplated and
Stop Loss—`66
painted components and has the largest facilities for these components in India. Omax also
has the largest sprockets manufacturing capacity in South East Asia which is the hub of auto
component manufacturers. The company employs all techniques and technologies like TPM, Subex Ltd.
TQM, SAP etc. which make a manufacturing firm lean and efficient. They have also diversi- CMP—`62.5
fied into defence and railway components and metal home furnishings business (with IKEA-
Sweden). Omax is original equipment manufacturer for variety of components for a huge Target—`67
selection of long term customers like Honda, HMSI, Hero Motors, Yamaha, Maruti, TVS,
Carrier, Cummins, Delphi, Piaggio, Supersprox etc. Omax Autos has strong business rela- Stop Loss—`60.7
tions with Hero group and Brijmohan Munjal is also the chairman emeritus. Net profit mar-
gin is low for the company as it is weighed down by expenses and interest payout however Sell :
the interest payout has lowered YoY and the profit and EPS has improved remarkably QoQ.
Q4 result will be announced and dividend will be considered on board meeting on May 28. Indian Oil
P/B ratio is 0.58 and is very low. P/E is 8.95 which is lower than the industry average. The
company is debt loaded and it is advised to not to enter into a long term position and stick to CMP—`351
the given target and stop loss. Target—`328

Technically Speaking Stop Loss—`363

Special points of in-

The Price chart has found short
term support at 40-41 and has
made a triple moving average
crossover (4,9 & 18 week)
The momentum chart shows re-
versal and suggests that bulls have
entered into trades.
The stochastic chart suggests that
stock had reached oversold region
and has reversed its direction with
bullish trades setting in.
The CCI chart suggests that the
stock is far from its average price
for 20 bar period (short term) and
is oversold. Crossover has oc-
curred and there may be an up-
move.
The %R also suggests the reversal
hence the indicators are aligned
with each other and the volumes
have dropped significantly after a
fall of about 10% in 1 month, indi-
cating the bears are leaving trades
and bulls may see an opportunity
and enter long trades forcing bears
to cover open short positions.
Recommendation : BUY
CMP : `42
Target Price : `47
Stop loss : `39.5
terest:
Since we are looking
at a trading horizon of
15-30 days, we shall
give more weightage
to technical analysis
and price trend of the
stock.
We shall also study the
fundamental aspects of
a company to avoid
getting into loss mak-
ing trade positions in
case of movement of
market in direction
opposite to that of my
prediction.