Stock Update
Force Motors Ltd
RETAIL RESEARCH
Scrip Code
FORMOTEQNR
September 22, 2015
Industry
Automobile
CMP
Rs.2380.70
Recommendation
Buy at CMP and add on declines to Rs.1900 –Rs.1950 band.
High Flyers
Sequential Price Targets
Rs.2969 and Rs.3272
Redflag level *
Rs.1790
Time Horizon
4-5 Quarters
*= price below which investors could review their investment including need to exit
Force Motors Ltd is a Pune based company engaged in the manufacture of LCVs, SCVs, utility vehicles, agricultural tractors and
other products related to automobile industry such as diesel engines. It has currently five plants in India, one each in Akurdi,
Pune; Pithampur, Madhya Pradesh; Urse, Pune; Mahindra World City, Tamil Nadu and Chakan, Pune.
Price Chart
Investment Rationale
 Post exit by Bajaj group in Aug 2014, the company has seen acceleration in its growth in sales, capex and tie-ups/contracts.
 Apart from core business of LCV, SUV, tractors, it has big plans in contract manufacturing space. It caters to world renowned
companies like Mercedes Benz India, BMW by assembling engines and axles for them.
 Light balance sheet and debt free.
Stock Details
BSE Code
500033
NSE Code
Not Listed
Bloomberg Code
Price (Rs) as on Sept 21,
2015
FML:IN
2380.7
Equity Capital (Rs cr)
13.18
Face Value (Rs)
Market Cap (Rs cr.)
10.00
3137.5
Book Value (Rs)
999.2
Avg. Volume (52 Week)
52 wk H/L (Rs)
176687
3288.0/906.0
Shareholding Pattern
(As on Jun 30, 2015)
% Holding
Promoters
Institutions
Non Institutions
Total
Zececa Mehta – Fundamental
Research Analyst
zececa.mehta@hdfcsec.com
60.12
7.04
32.84
100.00
Risks and Concerns
 Extended slowdown in the economy could impact its sales and margins
 Elevated levels of commodity prices (steel, rubber, crude oil, etc) could lead to lower profitability.
 Rising price of diesel could impact sale of diesel vehicles. Almost the entire sales of Force Motors is of diesel vehicles.
 Slowdown in tractors industry (due to failure of monsoon or rural slowdown) could affect fortunes of its tractor segment.
Conclusion & Recommendation
Revenue growth and profitability of the company seems to be on the up and the stock after a dream run in July/Aug 2015 has
corrected (though has risen from lower levels). The stock does not seem expensive from P/E, P/BV, Market Cap/Sales or
EV/EBITDA from FY17 perspective. However if the current market sentiments do not improve soon, it could underperform in
the extremely short term before improving later on.
We think that investors could buy the stock at the CMP and add on declines to Rs.1900-1950 band (~16xFY17E EPS) for
sequential targets of Rs.2969 and Rs.3272 (24.5x and 27xFY17E EPS) over 4-5 quarters.
Financial Summary
Particulars (Rs. Cr.)
Net Sales
Other operating revenue
Total Operating Revenue
Operating profit
OPM (%)
Reported PAT
PATM (%)
EPS (Rs)
FY12
588.9
22.5
611.4
26.9
4.6
-162.3
-27.6
-123.1
FY13
1922.2
50.5
1972.7
53.9
2.8
14.3
0.7
10.8
FY14
1997.9
23.7
2021.6
96.7
4.8
77.7
3.9
59.0
FY15
2337.3
26.5
2363.7
147.0
6.3
101.4
4.3
76.9
FY16E
2722.9
29.1
2752.0
195.2
7.2
127.2
4.7
96.5
FY17E
3226.7
32.6
3259.2
243.9
7.6
159.7
5.0
121.2
(Source: Company, HDFCSec, E: Estimates)
RETAIL RESEARCH
Page | 1
Business Overview
Force Motors established in 1958 by Shri N. K. Firodia is a fully vertically integrated automobile company, with expertise in
design, development and manufacture of the full spectrum of automotive components, aggregates and vehicles.
Force Motors (formerly known as Bajaj Tempo) started production of HANSEAT 3‐wheelers in collaboration with Vidal & Sohn
Tempo Werke Germany. The company played a pioneering role in the light commercial transport industry in India with iconic
brands like the Tempo, the Matador and the Traveller. Its range includes Trump small commercial vehicles, Trax multi‐utility
and cross country vehicles, Traveller light commercial vehicles/mini buses and the Balwan range of Agricultural Tractors. Force
Motors has also entered into the personal vehicles arena with the launch of a genre leading sports utility vehicle, the FORCE
ONE in August 2011.The Extreme Off‐Roader Vehicle; Gurkha is the second vehicle to be launched under the Personal Vehicles
Division.
Investment Rationale
Force motors assembles engines and axles for Mercedes Benz India and recently started catering to BMW
Force motors is a fully vertically integrated company engaged in the manufacture of LCVs, SCVs, utility vehicles, agricultural
tractors and other products related to automobile industry such as diesel engines. In 1997, fully aware of the strength of Force
Motors, in terms of engineering infrastructure and capabilities Daimler asked it to set up a dedicated facility for assembling
and testing engines for Mercedes passenger cars to be made in India. This business has grown to a substantial size as axles
(both front and rear) of the C, E, S class passenger cars and the M and GL class SUVs made in India have also been added to the
portfolio. Its Pune facility is used for assembling, testing engines and axles for Mercedes Benz. The company had supplied over
50,000 engines to Mercedes Benz since it formed a partnership with Mercedes Benz in 1997.
Force Motors has opened its new plant at Mahindra World City in Chennai. This plant, set up within a time of seven months, is
Force Motors’ third automotive manufacturing facility. It is also the company’s fifth plant in India and is spread across 1,00,000
sq ft. This plant has a total of 100 engineers all trained by BMW. This plant would cater to India’s third largest luxury car maker
BMW which is planning to procure engines from this facility. The plant (located at Mahindra World City) got operational from
January 2015 and Force Motors invested Rs.200 crore in this facility which can manufacture 20,000 units of premium engines
every year. This facility can go up to producing 50,000 units of engines per year, if needed. The Chennai plant will assemble
diesel engines for the BMW X1, X3, X5, 3 Series and 3 GT, 5 Series and 7 Series. Its Pithampur facility, meanwhile, assembles
the Force One SUV. The local manufacturing of engines will help BMW save import costs and price its models more
competitively.
Force Motors is the only company in the world who is producing engines for the top European brands, Mercedes Benz and
BMW. It is the first company in the world to do powertrains for both Mercedes (Benz) and BMW which is very unique thing.
Force Motors will also set up a new plant at Chakan, Pune to make engines and axles for luxury carmaker Mercedes-Benz. The
company is already making these components for Mercedes at its existing plant in Akurdi near Pune. This Chakan facility is
RETAIL RESEARCH
Page | 2
expected to go on stream by the end of 2015. The annual capacity will be of 50,000 sets a year. Force Motors has been making
engines and axles for Mercedes cars that are assembled in India for 18 years, and the new plant will cater to all their future
requirements. Mercedes currently sells around 10,000 cars a year in India, and builds five models – C-Class, E-Class, S-Class,
GL-Class and the ML-Class at its Chakan plant. It has recently announced plans to build the compact sedan CLA-Class also
locally.
Further, the company is also setting up two manufacturing facilities, one each in Madhya Pradesh and Gujarat to manufacture
auto-components. The Dewas facility will manufacture aluminium cylinder heads with a capacity to produce one million pieces
which would be a single source to Ford’s Sanand facility for its dragon engines. The plant is a 50-50 joint venture between the
Pune-based Jaya Hind Industries, also a Firodia Group company, and Montupet SA of France.
Force Motors expects to triple its revenue to Rs 3,000 crore in next three years driven by its contract manufacturing business
for leading automobile companies like Mercedes Benz and BMW.
Force able to drive ‘force’ in each of its vehicle segments - Off-roader, PV, Tractors, LCV
Force Motors has launched the Gurkha, off roader, in September 2014. Management says that Gurkha is unique in many ways;
that, it is the only vehicle that comes equipped with differential locks on both front and rear axles and also said that they are
eyeing a 20 percent market share in the off road vehicle segment in India. It was to initially market the product in
Maharashtra, Madhya Pradesh, Uttar Pradesh, Bihar and Chattisgarh and later to the rest of the country. Force Motors
launched the Gurkha through their passenger vehicle network initially and then utilised their strong commercial vehicle
networks to penetrate deeper across the country.
Even before its India launch the company has already started exporting to various markets in Africa. Force Motors is also
looking to expand its overseas presence, and has identified certain overseas market like Latin America, Nepal, Bangladesh and
Sri Lanka. The company is currently building its dealer networks in these regions. Force Gurkha, a highly niche product, is
gaining traction and has shown good results in FY15.
Force Motors operating in the light commercial vehicle and passenger carrier segments is probably the largest ambulance
maker in the country and has registered a growth of almost 12 per cent during FY15 in this segment. In passenger vehicles,
Force continues to have a market leadership position for its Traveller vehicles. It has developed a lot of new variants in this
segment which will help grow stronger in this segment. Also the company is working on a completely new van which will be
launched in the next few years. Force Motors school buses have also started giving good returns.
For the past two consecutive years, Force has significantly increased its volumes in agricultural vehicles. Its tractors, though
constituting a small segment, have registered a growth of almost 55 per cent in FY15 over the last year. The tractor business of
the Company has shown an improvement in sales on account of the focused effort in select markets, and the significantly
improved customer support established. During FY15, the tractor industry declined by 13 percent over FY14. However the
RETAIL RESEARCH
Page | 3
company’s sale of tractors improved by 28 percent. While the 25 horse power Orchard tractor has met with very good
acceptance in select markets, efforts are on to enhance the penetration of higher horse power tractors from the Balwan
range, available in the company’s product portfolio.
In the MUV segment, its Trax vehicles have been performing quite well and are leading the market.
Despite a sluggish trend in sales of LCVs, tractors etc, sales by Force Motors has not fallen to the same extent and in some
cases, has risen y-o-y.
Total monthly sales by Force Motors
Force Motors focuses on the niche passenger segment of the overall LCV market (where it has a market share of around 40
per cent), and more specifically in the market for LCVs with a maximum mass of five tonnes (where it has a market share of
around 70 per cent). The company's healthy market position, which has strengthened significantly over the last five years, is
supported by its strong brand, 'Traveller'.
Force Motors has diverse revenue streams, with commercial vehicles, tractors, and auto component businesses contributing
around 60, 10 and 30 per cent respectively to its revenues. This diversity has enabled it to overcome the sluggish demand
scenario in the domestic auto industry. With the addition of new customers in the auto component business, its revenue
dependence on niche (and to some extent cyclical) LCV segments is expected to reduce over the medium term. While its sales
of automobiles rose 9% in FY15 that of components rose 29% (though on a lower base compared to automobiles). Part of the
RETAIL RESEARCH
Page | 4
reason for increase in OPM in FY15 can be explained by the higher contribution of components (whose contribution could rise
even more going forward).
Foreign collaboration for new MPV – postponed but not cancelled
Force Motors had planned to develop a new multipurpose vehicle (a 9-seater van) in association with Daimler AG and the new
vehicle was expected to be launched in 2014. The new MPV would be on the similar lines of Mercedes-Benz’s Viano MPV,
known for offering the services of a van while delivering the luxury of a car. The company was all set to invest very heavily up
to the tune of Rs. 400 crores for the production and R&D of the Viano based MPV. Since the automotive industry is
experiencing a thorough slowdown at the moment, Force Motors has decided to postpone this vehicle to 2015.
The vehicle will primarily target tour and travel operators and tourism sector across India. According to the management,
tourism will boom in the country, providing good opportunity for growth for the company.
Light balance sheet and debt free
Force Motors has sold its entire stake in the Man Force Trucks Ltd, a 50:50 JV with Force and Germany's MAN Truck & Bus AG
in March 2012 for Euro 150mn. The JV was a loss making one and by getting rid of that business Force Motors was able to
bring down its debt, which was around Rs.329 crores as of Sep 2011 to Rs. 10.7 crores as of March 2015. Now it is, sitting on
cash of around Rs. 307 crores. Capacity expansions and setting up of new plants have been primarily funded through internal
accruals. The company is sitting on cash per share of around Rs. 235.
A debt free balance sheet gives the company enough cushion to raise funds for its future expansion plans. The margins and
return ratios could also improve once the high margin products like off road vehicles of the company starts to gain traction.
Promoters increased their stake as Bajaj ends decade old alliance
The promoters of the company have been increasing their stake in the company. Initially, Bajaj Holdings and Investments
Limited was having 19.48% share holding in the company. In February 2014, the promoters- Jaya Hind Investments and others
bought 4.79 percent stake from Bajaj Holdings and thereby increased their holding in the firm to 56.54 percent. Then there
were several open market operations through which the Bajaj Holdings’ stake further moved down to 4.04%. On July 31, 2014,
Force Motors announced that the Promoters of the Company, viz. Jaya Hind Investments and others, have acquired 4,20,000
equity shares of Rs.10 each from the market. With this acquisition, the number of shares held by the promoter Group
increased from 74,49,411 equity shares to 78,69,411 equity shares, i.e. from 56.54% to 59.72% of the total Paid Up Share
Capital of the Company. On 13th March 2015, the promoters of the company, Jaya Hind Investments Pvt. Ltd, acquired 100,200
equity shares of Rs.10 each from the market. With this acquisition, the number of shares held by the promoter group stands
increased from 7,821,295 equity shares to 7,921,495 equity shares, from 59.36% to 60.12% of the total paid up share capital
of the company.
RETAIL RESEARCH
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This resulted in the promoters strengthening their grip on the company after the uncertain period when Bajaj group was a
large shareholder. Final clarity on shareholding could result in faster decision making for the company.
Particulars (%)
Indian Promoters
Mutual Funds
FIs, Banks and Insurance companies
FIIs
Corporate
Public & Others
Totals
Jun-15
60.12
0.81
0.19
6.04
4.47
28.37
100.0
Mar-15
60.12
0.59
0.18
6.12
4.77
28.22
100.0
Dec-14
59.36
0.54
0.18
5.42
5.29
29.21
100.0
Sep-14
59.36
0.53
0.20
5.76
7.37
26.78
100.0
Jun-14
56.54
0.00
0.26
5.73
18.90
18.57
100.0
No. of shares held by the Promoter
7921495
7921495
7821295
7821295
7449411
The factories of Force Motors and Bajaj Auto, the flagship of the Bajaj group, at Akrudi in Pune share a common wall. Force
Motors founder NK Firodia had sold a controlling stake in the company to Bajaj group and it was then renamed Bajaj Tempo.
In 2001, Germany's Daimler, which owned a 16 per cent stake at the time in Bajaj Tempo, sold its stake to the Firodias, giving
back the control to the family. The Tempo brand, which belonged to Daimler, was gradually phased out and the company was
named Force Motors.
Core competency in vehicles/components and expansion plans
Force Motors have partnered with leading global automotive companies to develop necessary expertise in-house for design,
development and manufacture of automobiles, sub-systems, components and aggregates. Due to this, its vehicles have
reached the niche markets of Middle East, Asia, Latin America and Africa. The management had said (in August 2014) they
expect to spend Rs.1000 crores over the next four to five years on technology advancement, new vehicle development, setting
up facility in Chennai for assembling engines for BMW (already running currently).
Financials
The number of vehicles sold during FY15 was 29,366 compared to 27,537 vehicles sold in the year 2013-14. During FY15 the
sales turnover stood at Rs. 2,363.72 crore compared to FY14 turnover of Rs. 2,021.6 crore. The sale of the Traveller van,
backed by improved sale of school buses, etc. registered good growth. The company has made significant efforts to align
product offerings in the van range to changing market requirements.
The tractor business of the Company has shown an improvement in sales on account of the focused effort in select markets,
and the significantly improved customer support established. During FY15, the tractor industry declined by 13 percent over
FY14. However the Company’s sale of tractors improved by 28 percent (though on a small base). While the 25 horse power
RETAIL RESEARCH
Page | 6
Orchard tractor has met with very good acceptance in select markets, efforts are on to enhance the penetration of higher
horse power tractors from the Balwan range, available in the Company’s product portfolio.
During FY15, special efforts have been made to introduce product variants on the Traveller platform on the 26 seater Traveller
a special luxury model, with air suspension and air conditioning, with seating for 15 passengers has been introduced. These
have been well received.
The Company’s 4x4 Off Road product – the GURKHA is widely acclaimed and appreciated as one of the best offroad vehicles
anywhere. In the Rain Forest Challenge competition, which is an international competition carried out under excruciatingly
difficult conditions, the Company’s vehicles were placed first and second in 2014.
The Company has made satisfactory progress in developing a complete range of engines, with various displacement capacities
such as 2 litres, 2.6 litres and 3.2 litres. These engines are established to meet not only BS IV emission requirement, but are
capable of meeting the BS V and BS VI emission regulations.
For Q1FY16, the company reported net sales of about Rs 634.1 crore, growth of ~18% YoY. The operating profit rose by about
50% YoY to Rs. 54.7 crore and OPM came in at 8.6%. Depreciation charges and interest cost were down and so in spite of rise
in the tax rate, PAT came in at Rs 35.8 crore as against Rs 19.4 crore in Q1FY15.
Risks and Concerns
RETAIL RESEARCH

Elevated levels of commodity prices (steel, rubber, crude oil, etc) could lead to lower profitability.

Rising price of diesel could impact sale of diesel vehicles. Almost the entire sales of Force Motors are of diesel vehicles.

Slowdown in tractors industry (due to failure of monsoon or fall in growth of rural incomes) could affect fortunes of its
tractor segment.

Force Motors faces competition in the LCV segment and also in the tractor and Off road segments from M&M, Tata
Motors and LCVs manufactured through Ashok Leyland-Nissan JV.

Since Force Motors has started exporting to newer geographies, any adverse movement in currencies will have a
negative impact on margins.

Operating profitability has been low so far due to high fixed costs and low average plant utilization. Its return ratios
have been low till date due to high capex done recently which are yet to translate into returns. Part of the reason for
low PAT margin and low return ratios is that the company provides accelerated depreciation on its assets.

As imports (including that of components) are much higher than exports, it faces the risk of loss if the Rupee
depreciates against other currencies including the USD and Euro.
Page | 7

Extended slowdown in the economy could impact its sales and margins
Conclusion & Recommendation
Force Motors has reported improving numbers over the last few quarters driven by higher contribution from outsourcing of
components by international giants and better performance from its core automobile business.
Revenue growth and profitability of the company seems to be on the up and the stock after a dream run in July/Aug 2015 has
corrected (though has risen from lower levels). The stock does not seem expensive from P/E, P/BV, Market Cap/Sales or
EV/EBITDA from FY17 perspective. However if the current market sentiments do not improve soon, it could underperform in
the extremely short term before improving later on.
We think that investors could buy the stock at the CMP and add on declines to Rs.1900-1950 band (~16xFY17E EPS) for
sequential targets of Rs.2969 and Rs.3272 (24.5x and 27xFY17E EPS) over 4-5 quarters.
Particulars (Rs. Cr.)
Net Sales
Other operating revenue
Total Operating Revenue
Total Operating Expenses
Operating profit
OPM (%)
Reported PAT
PATM (%)
EPS (Rs)
FY12
588.9
22.5
611.4
584.6
26.9
4.6
-162.3
-27.6
-123.1
FY13
1922.2
50.5
1972.7
1918.8
53.9
2.8
14.3
0.7
10.8
FY14
1997.9
23.7
2021.6
1924.9
96.7
4.8
77.7
3.9
59.0
FY15
2337.3
26.5
2363.7
2216.7
147.0
6.3
101.4
4.3
76.9
FY16E
2722.9
29.1
2752.0
2556.8
195.2
7.2
127.2
4.7
96.5
FY17E
3226.7
32.6
3259.2
3015.3
243.9
7.6
159.7
5.0
121.2
(Source: Company, HDFCSec, E: Estimates)
RETAIL RESEARCH
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Financials
Quarterly – Standalone
Particulars
Net Sales
Other Operating Income
Other Income
Total Income
Total Expenditure
Raw Material Consumed
Change in inventories
Employee Expenses
Other Expenses
PBIDT
Interest
PBDT
Depreciation
PBT
Tax (incl. DT & FBT)
Reported Profit After Tax
EPS (Rs.)
Equity
Face Value
OPM (%)
PATM (%)
Q1FY16
634.09
5.92
15.16
655.17
585.28
478.86
-26.97
66.82
66.57
69.89
0.77
69.13
19.73
49.40
13.64
35.76
27.1
13.2
10.0
8.6
5.6
Q1FY15
538.42
6.59
11.99
557.00
508.46
361.34
25.63
60.02
61.47
48.54
1.93
46.61
21.65
24.96
5.56
19.40
14.7
13.2
10.0
6.8
3.6
VAR [%]
17.8
-10.2
26.5
17.6
15.1
32.5
-205.2
11.3
8.3
44.0
-60.3
48.3
-8.9
97.9
145.1
84.4
Q4FY15
694.55
8.39
21.70
724.64
643.35
442.93
40.06
73.06
87.29
81.29
1.61
79.68
20.50
59.18
12.90
46.28
35.1
13.2
10.0
8.6
6.7
(
(Source: Company, HDFCSec)
Profit & Loss – Standalone
Particulars (Rs. in Cr)
INCOME:
Net Sales
Other Operating Income
Total Operating Income
EXPENDITURE:
Materials Cost
Employee benefits expenses
Other Expenditure
Total Operating Expenses
Operating Profit
RETAIL RESEARCH
VAR [%]
-8.7
-29.4
-30.1
-9.6
-9.0
8.1
-167.3
-8.5
-23.7
-14.0
-52.6
-13.2
-3.8
-16.5
5.7
-22.7
FY12
FY13
FY14
FY15
FY16E
FY17E
588.93
22.49
611.42
1922.20
50.52
1972.72
1997.89
23.74
2021.63
2337.27
26.45
2363.72
2722.92
29.10
2752.02
3226.66
32.59
3259.25
444.89
60.20
79.47
584.56
26.86
1408.76
262.32
247.76
1918.84
53.88
1416.04
240.56
268.31
1924.91
96.71
1641.03
277.73
297.95
2216.72
147.00
1882.90
319.94
353.98
2556.82
195.20
2221.55
375.91
417.85
3015.31
243.94
Page | 9
Other Income
EBITDA
Interest
Depreciation & Amortisation
Profit Before Tax
Total Tax
Reported Profit after Tax
20.65
47.51
10.84
16.44
20.23
182.50
-162.27
43.65
97.53
8.24
70.16
19.13
4.85
14.28
59.94
156.65
9.18
84.84
62.63
-15.07
77.69
69.07
264.26
6.00
94.14
164.12
36.93
127.19
74.59
318.53
5.50
105.03
208.00
48.26
159.75
(Source: Company, HDFCSec, E: Estimates)
Balance Sheet - Standalone
RETAIL RESEARCH
65.78
212.78
6.55
81.28
124.94
23.58
101.36
Particulars (Rs. In Cr)
Equity & Liabilities
Shareholders’ Funds
Share Capital
Reserves & Surplus
FY12
FY13
FY14
FY15
FY16E
FY17E
1143.3
13.2
1130.1
1152.9
13.2
1139.8
1226.0
13.2
1212.8
1316.9
13.2
1303.7
1444.1
13.2
1430.9
1603.8
13.2
1590.6
Non-Current Liabilities
Long Term borrowings
Deferred Tax Liabilities (Net)
Other Long Term Liabilities
Long Term Provisions
116.4
59.7
19.1
4.0
33.6
95.5
42.0
21.9
4.0
27.6
51.6
20.4
6.6
4.0
20.7
60.5
10.7
26.6
4.0
19.2
61.7
10.5
26.1
4.0
21.1
64.7
10.0
27.1
4.0
23.7
Current Liabilities
Short Term Borrowings
Trade Payables
Other Current Liabilities
Short Term Provisions
404.7
0.0
243.7
130.7
30.3
459.4
0.0
252.6
184.6
22.2
494.2
0.0
299.9
168.9
25.4
594.3
0.0
392.8
161.7
39.8
628.8
0.0
412.5
174.6
41.8
701.7
0.0
462.0
193.8
45.9
Total Equity & Liabilities
1664.4
1707.8
1771.9
1971.7
2134.6
2370.3
Assets
Non-Current Assets
Fixed Assets
Non-Current Investments
Deferred Tax Assets (Net)
Long -term Loans and Advances
Other Non-Current Assets
614.1
544.1
0.9
0.0
69.0
0.0
887.3
810.6
1.2
0.0
75.5
0.0
926.6
849.1
1.2
0.0
76.3
0.0
978.5
877.3
1.2
0.0
100.0
0.0
1123.5
1012.3
1.2
0.0
110.0
0.0
1241.7
1117.3
1.2
0.0
123.2
0.0
Current Assets
Current Investments
1050.3
0.0
820.5
0.0
845.3
0.0
993.2
0.0
1011.1
0.0
1128.6
0.0
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Inventories
Trade Receivables
Cash & Cash Equivalents
Short Term Loans & Advances and other current assets
Other Current Assets
362.4
156.4
462.1
69.0
0.4
381.6
108.8
225.1
101.8
3.2
377.3
135.1
216.1
115.0
1.9
392.5
108.7
303.0
184.7
4.3
431.8
117.4
254.1
203.1
4.7
483.6
130.3
281.9
227.5
5.2
Total Assets
1664.4
1707.8
1771.9
1971.7
2134.6
2370.3
(Source: Company, HDFCSec, E: Estimates)
Key Financial Ratios – Standalone
Particulars
No of Equity Shares
Current Market Price
Market Capitalization
Enterprise Value
FD EPS
Cash EPS (PAT + Depreciation)
PE(x)
Book Value (Rs.)
P/BV (x)
OPM (%)
PBT (%)
NPM (%)
ROCE (%)
RONW (%)
Debt-Equity
Current Ratio
Mcap/Sales(x)
EV/EBITDA
FY12
1.3
2380.7
3137.5
2735.1
-123.1
-110.7
-19.3
867.5
2.7
4.6
3.4
-27.6
2.6
-14.2
0.1
2.6
5.1
57.6
FY13
1.3
2380.7
3137.5
2954.4
10.8
64.1
219.7
874.8
2.7
2.8
1.0
0.7
2.3
1.2
0.0
1.8
1.6
30.3
FY14
1.3
2380.7
3137.5
2941.8
59.0
123.3
40.4
930.3
2.6
4.8
3.1
3.9
5.8
6.3
0.0
1.7
1.6
18.8
FY15
1.3
2380.7
3137.5
2845.2
76.9
138.6
31.0
999.2
2.4
6.3
5.3
4.3
9.9
7.7
0.0
1.7
1.3
13.4
FY16E
1.3
2380.7
3137.5
2893.9
96.5
167.9
24.7
1095.7
2.2
7.2
6.0
4.7
11.7
8.8
0.0
1.6
1.1
11.0
FY17E
1.3
2380.7
3137.5
2865.6
121.2
200.9
19.6
1216.9
2.0
7.6
6.4
5.0
13.2
10.0
0.0
1.6
1.0
9.0
(Source: Company, HDFCSec, E: Estimates)
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One Year Price Chart
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Technical View:
After falling sharply from a high of 3,288, Force Motors found support at the 1,911 levels, which also roughly corresponds to the previous
intermediate highs of the stock. This indicates that the change of polarity principle is at work; i.e. prior resistance is now a support.
On Monday, the stock broke out of a narrow range between the 2,226 and 2,347 levels on the back of higher than average volumes. This
indicates that there was significant accumulation in the stock, which augurs well for the upmove to continue.
Short term technical indicators too are giving favorable signals as the stock trades above the 13-day simple moving average and the 14-day RSI
too is climbing after finding support around the 40 levels. In the recent past, the stock has rallied whenever the 14-day RSI has bounced from
around the 40 levels.
Zooming into the weekly charts, we observe that the stock is in a long term uptrend and is well supported by an upward sloping trendline that
has held the intermediate lows of the stock of the last one year.
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Intermediate technical indicators too are giving favorable signals as the stock trades above the 13-week simple moving average and the 14-week
RSI is beginning to climb higher after finding support around the 60 levels.
Positional traders may use any temporary weakness towards the 1900 support levels to buy into this stock.
One can therefore buy the stock on any declines towards the 1950-1900 levels. Stop loss can be placed below the supports at 1790. Our
intermediate targets for the next 6-9 months are at 3000 and 3300. This gives us an attractive risk reward ratio.
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Fundamental Research Analyst: Zececa Mehta (zececa.mehta@hdfcsec.com)
HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066 Website:
www.hdfcsec.com Email: hdfcsecretailresearch@hdfcsec.com
Disclosure:
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that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.
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or more in the subject company at the end of the month immediately preceding the date of publication of the Research Report. Further Research Analyst or his relative or HDFC Securities Ltd. or its associate does not have any
material conflict of interest. Any holding in stock – No
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