The Hindu Business Line : Amtek India: Buy

Taking into account the strong fundamentals, the expanded capacities being commissioned and the strong growth prospects, long-term investors can buy the Amtek India stock at the prevailing levels.

Business

The company makes automotive components and castings. It is among the largest producers of gear-shifter forks in the country. The company's business prospects are linked to the passenger car and tractor production.

Amtek recorded steady growth in earnings in recent quarters. For the three months ended December 2005, the turnover rose 45 per cent to Rs 122 crore and the post-tax earnings 17 per cent to Rs 18 crore. Expanding the capacity of the automobile components division has played a major role in bolstering the earnings growth.

Expanding capacity

The company is now expanding the capacity of its castings unit to 70,000 tonnes per annum from 30,000 tpa. This is expected to contribute to the earnings in the next fiscal. Meanwhile, the company has acquired the UK-based auto-ancillary company, SigmaCast group. Amtek India's earnings would get a boost once it starts catering to the castings division of SigmaCast group.

To drive revenues, Amtek is planning to shift to its Bhiwadi unit a couple of SigmaCast's production lines . The commissioning of the expanded capacity of the castings division would enable Amtek India to act as an outsourcing hub for its UK subsidiary.

Taking into account these factors, the long-term prospects for Amtek India appear positive. Overseas acquisition and the subsequent shifting of production lines from the UK would lend more stability to the earnings stream.

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