TIL Ltd - BUY

  

   

I know ,many of you may raise eyebrows for recommending a loss making company this time.As a contrarian bet I am taking  one such company -TIL Ltd – for genuine investors.I believe if the poor performance of any company is only due to a temporary demand slackness in that particular industry ,such situations should be used to enter in quality companies from such  sectors. Proper time of entry and depth of patience will help to make robust return in such cases. As you are aware ,overall engineering industry in India is going through a rough patch due to lower capex for the  past few years.Delay in various approvals by government authorities for larger projects ,higher interest rate ..etc are the main reason for this scenario.I feel ,we are almost at the bottom of a poor capex cycle and it is the time to acquire quality companies from this sector and wait with patience to reap the benefits in medium to long term.TIL is a Kolkata based company manufacturing and distributing engineering equipments for sectors like material handling ,mining,construction,earth moving ..etc. TIL along with its subsidiaries  operating in four divisions –

1)    Material Handling ( Mobile Cranes,Tower Cranes,Container Handler,Forklift..etc)

2)    Equipment and Project Solution (Hot Mix Plants,HD Drills, Crushing and Screening Solutions ..etc

3)    Construction and Mining Equipments  (Excavators,Off-highway trucks,Loaders..etc

4)    Power System Solutions ( Diesel Generators with various capacities)

The above product profile clearly indicating company’s presence in each and every important segments of infrastructure development.

Company is also serving as the dealer for Caterpillar products for  north and east India and Bhutan through its  subsidiary Tractors India Private Ltd.During the past few quarters company came through serious challenges mainly due to poor  demand in  power systems and construction divisions on account of  delay in various infrastructure projects in roads, power and mining space. For FY 2010-11 company reported a top line of Rs.1380 Cr ,  net profit of Rs.60 Cr and an EPS of Rs.60 /- .In FY 2011-12 profit declined substantially to Rs.15 Cr and again in subsequent quarters of FY 13 TIL reported losses .  As a reflection of this bad financials its share price nosedives from a high of Rs.750 level to current level of sub Rs.200. I believe ,government will now  initiate some steps to improve the momentum of the economy including aggressive capex plans by PSU companies.Since there is not much distance  to the next parliament election ,chances are there for a speedy approval of projects which delayed in past many months or years.Altogether I strongly feel this is the time to buy quality companies from sectors which may directly benefited  by an improved  capex cycle.TIL is one such company operating in many of these  verticals and recommending it  for investors with enough patience which is now trading even below its book value of Rs.270/-.This stock is listed both in NSE and BSE and trading at CMP of Rs. 205 /- 

Link to Company Website HERE

Link to latest Annual Report HERE