Sandeep Shah Bullish on Auto Ancillary Space
Resource from: CBCC Likes:2944
Sep 20,2010
CEO, Sampriti Capital is bullish on auto ancillary space.
Shah told CNBC-TV18, "I have been bullish on auto ancillaries for more than a year now and that has given us very rich rewards and it has been my view for sometime that the auto ancillary cycle will last for atleast 2-3 years. Besides the cycle has come back in earnest after 6-7 years and ofcourse in the way we will have a cyclical correction, in the way there will be a time when you might see a bit of growth pans in autos and volume growth might come off especially if interest rates creep up. But a lot of these companies most of them are running at full capacity or just have very little idle capacity. In a relative sense they have pricing power because there is more demand and there is supply, so that is a sector that I am bullish on and I continue to stay bullish on. I think that is a sector that will continue to outperform for the next two years.”
He further added, "We have looked at some of the smaller companies also in that space, some of them are fairly smallish caps but there are some – you could play the forging companies. Antifriction Bearings (ABC Bearings) has doubled in the last four-five months but it is a company, which has got the highest margins in the industry. They have a tie up with NSK which is the second largest bearings manufacturer, their margins are higher than SKF, and their margins are higher than NRB."
"It is a very good clean management; they have paid off all their debt. When we bought it of a low base, the company was growing at 300-400% but even now growth is fairly strong and I think it still trades at about 6 times FY11 earnings. It is growing at more than 50% and for a company of this size, what is very interesting about this company is that it is almost absolutely professionally managed, you have the promoters and the management divorced in the sense that you have an independent CEO who totally runs the business, which is very rare for the company of this size and so that is a stock that we like a lot."
(CBCC)
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