Recommendation from Auto Ancillaries - Castings/Forgings and Auto Ancillaries - Auto, Truck & Motorcycle Parts

The scrips in this column have been recommended with a 15-day investment horizon in mind and carry high risk. Therefore, investors are advised to take into account their risk appetite before investing, as fundamentals may or may not back the recommendations.

MAGNA ELECTRO CASTINGS LTD
CMP - ₹430.45
BSE CODE 517449
Volume 12,324
Face Value ₹10
Target ₹494 - 520
Stoploss ₹398 (CLS)

The company manufactures and supplies ferrous components in small and medium volumes to customers all over the world. It specialises in the production of ductile iron and gray iron castings weighing from 300 grams to a maximum of 2000 kilograms. Taking into account the company's quarterly performance, it reported a modest growth of 4.36 per cent from ₹35.28 crore registered in Q4FY22, recording total revenue of ₹36.82 crore in Q4FY23. When comparing the net profit for the fourth quarter of FY23 to the same quarter last year, it skyrocketed 150.14 per cent from ₹1.10 crore to ₹2.75 crore. The stock has a decent RoE and RoCE of 10 and 13 per cent, respectively. The shares have received a lot of buying interest and are currently trading close to a 52-week high. Shares have experienced a strong rally, soaring more than 28 per cent in just one month and around 150 per cent over the last year. Hence, we recommend BUY

Sundaram-Clayton Ltd
CMP - ₹4750.80
BSE CODE 520056
Volume 766
Face Value ₹5
Target ₹5,100 - 5,170
Stoploss ₹4,580 (CLS)

Sundaram Clayton is engaged in the business of manufacturing and distributing aluminium die castings and manufactures non-ferrous gravity and pressure die castings. It supplies its product to major bands like the TVS Motor, the Cummins Group, the Volvo Group, and many more. In March 2023, the net sales reached ₹8,459.86 crore, showing a 22.58 per cent increase compared to ₹6,901.63 crore in March 2022. As for the EBITDA, it stood at ₹1,161.80 crore in March 2023, reflecting a 26.52 per cent growth from the ₹918.27 crore achieved in March 2022. The quarterly net profit for March 2023 amounted to ₹153.56 crore, which represents a 6.08 per cent decrease from the ₹163.50 crore recorded in March 2022. The company recently disclosed to the exchange that it has increased its ownership stake in subsidiary Emerald Haven Realty by an additional 11.20 per cent, resulting in a total stake of 77.60 per cent. Hence, we recommend BUY.