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Indag Rubber:Seems like a value buy

Here are the details of Indag Rubber:-
  • The company is the the tyre retreading business.
  • RoE is approx 32% and RoCE is 28.5%
  • FY10 Sales is 111 cr and profit is 11.5 cr
  • Market Cap is currently around 55 cr. i.e, Market Cap is lesser than prev year sales
  • Dividend Yield of 3.8%
  • Last 3 year PAT CAGR is 40% and Sales CAGR is 22%
  • Current PE is around 4.7
Notes from Annual Report 2010
  • Increase in raw materials has exerted pressure on operating margins

  • Expanded manufacturing capacity at its Nalgarh plant in Himachal

  • Precured tread rubber production is now at 1200 tons per month and 1800 tons of uncured rubber gum

  • Due to a increased demand of precured tread rubber, product accessories such as URSG and vulcanizing cement (both are basically the adhesive for pasting the tyres to the pretreads by the cold-bonding process) are also seeing increased demand

  • Manufacturing is at 100% capacity for these additives, but demand is much greater. The increase in capacity will cater to this demand.

  • Dividend of Rs 4 per share in FY 10

  • Competition: Tyre manufactures are also launching their own retreads

  • Company takes payment in advance or as PDC on delivery in most cases.

  • Auditors S.R. Baltiboi does not want to continue as auditors for the company.

  • Promoter holding is 34.97% and Directors & their families hold another 44.9%. So, in all, company insiders own nearly 90% stake in the company.

  • Rs 1.39 crores Income Tax is under litigation in the Delhi High Court from 1998-99.


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