INDAG RUBBER - UPDATES

 I have recommended a BUY on Indag Rubber @ Rs.95/- on July 2,2011.( For old Posting Click HERE) .Today it closed at Rs.245/- after touching its life time high of Rs.258 ,an appreciation of about 150% in 14 months . Those with some risk appetite may still hold it .Softening of raw material price may positively affect its profit margins in current quarter.

INDAG RUBBER - BUY

Indag Rubber is a Khemka Group company mainly engaged in the manufacturing of tread rubber for auto sector.  It makes  pre-cured tread rubber (PTR), rubber strip gum, universal spray cement and tyre envelops ..etc  Company having two manufacturing units , one in Himachal Pradesh and other in Rajastan . Indag is the company which introduced cold retreading technology in India . Company's financials are strong with minimum debt and higher promoter stake. Last year company expanded its capacity at Himachal unit and current capacity from this unit alone is 1200 ton tread rubber and 1800 ton rubber gum. Cost of raw material was a big problem for this company in recent past . But the US decision to discontinue the easy money policy for the time being is expected to bring down commodity prices in near future. Natural rubber prices are showing some weakness and it it expected to show this trend in coming months .If this trend continuous ,  it will surely help Indag to improve its margins. For the financial year ended March 2011 , Company posted a turnover of Rs.150 Cr and a net profit of Rs.11 Cr.Full year EPS was Rs.20 . At CMP of Rs.95 , Indag is trading at a P/E multiple of  just 4.75  which is a risk less bet at CMP . Keep watching the  movement of the cost of raw materials closely.