Investment Ideas For 12--18 Months

Investment Opportunity: Force Motors. 

Industry: Automobiles

Horizon: 12 to 18 months

(BSE Symbol: FORCEMOT| BSE Code: 500033)

Last closing price (22-08-2014): Rs.804.40     Face Value:-Rs.10/-   Book Value:Rs.930.20

Share Holding Pattern: Promoters-56.54%   &    Public-43.46%

Price Background: The all-time high for the script is Rs.1045 was made on 5.10.2010 and all-time low of Rs.54.50 was made on 6.3.2009 . High and Low for year 2013 was Rs.495 & Rs.225 . The high & low for year 2014 (as on date) is Rs.858 & 281.65 made on 19.8.2014 & 14.2.2014.

Fundamental: The Company has come out with good financial result and posted Net Profit of Rs.77.84 crores for FY 2013-14 against Rs.14.42 crores for FY 2012-13 giving an  EPS of Rs.59.08 for 2013-14 against Rs.10.95 for 2012-13.The company has declared dividend of 30% for the year 2013-14.The company clocked  a sales of 545.01 Cr for the June-14 quarter which is 8.06% higher then the corresponding June-13 quarter but if you compare it with March-14 quarter then the sales are marginally down by 3.72%.The net profit for the June-14 qtr is up by 35.94%then the corresponding June-13 qtr giving a quarterly EPS of Rs.14.72 based on this we can  conservatively assume that if other things remain the same it can clock an annualized EPS of Rs.62/ furthermore the automobile sector doing good can also help to achieve better financial results, therefore at current price the stock is running at a P/E of 12.97 on 2014-15 EPS and at a P/E of 13.61 on 2013-14 EPS whereas the industry P/E is between 47--57.Therefore, I feel that the stock  is under -valued and has a good potential to move up from here.

Technical: Technically the stock is nicely poised.

Recommendation: I expect a return of 50-75 % from here in 12-18 months. I therefore recommend investing at least 20% of the marked fund for the script at the current level and then suggest buying on dips. Kindly be alert if the stock price goes below 620 and stays at that level. Please get out of the stock if price closes below 531 and stays for 2-3 days. 

Note:

1.    Price stated here is of spot market

2.    Recommendations are valid till the stop loss is triggered

3.    Kindly note that make your cost your stop loss in favorable trade and then trail it as the price of the stock moves up to gain maximum profit.

 Contact me for strategic guidance to enter and exit the trade