Wednesday, March 3, 2010

AMCO INDIA - Change in Product mix will change fortunes

Amco India Ltd is a multi product company  started in 1981.It has three main business verticals – PVC Leather Cloth, PVC films and sheeting and Aluminium foil division. Its products are mainly used for manufacturing sports goods ,furnishing items, door panels of vehicles, raincoats , pharma and FMCG sector. All of these three verticals are growing almost 15% per annum in our country .Amco has three factories ,2 in Noida and 1 in Rajasthan. Company is now paying much attention to the aluminium foil industry where scope is immense due to  the growth of pharma sector .Other major companies in this sector are Bilcare and Essdee Aluminium .

In the financial front too company is performing well in recent times. Company has an equity base of  4.1 crore with a promoter stake of 63% .Last financial year Amco posted a net profit of just 1 crore  ie, an  EPS of Rs.2 .On improved margins and sales , in nine month of  current year company already  posted a net profit of 3.7 crore  and EPS of Rs.8.95. Now it is quoting  around Rs.35/- with a P/E multiple of just 3 on estimated full year EPS of Rs.12. PVC /Plastic related companies are traditionally quoting at lower P/E but considering the thrust of Amco in the aluminium foil business ,image of this company may change in future. Investors may take some exposure at current level for decent return going forward.

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