V.S.T.TILLERS TRACTORS LTD - BUY

  
Ever increasing demand for food and serious shortage of man power in farming sector creating challenges as well as opportunities for various participants.Government schemes like food security bill etc.. are expected to add fuel into fire. Increasing productivity using Scientific farming techniques and mechanization of farming activities are the only solution for this serious issue.VST Tiller and Tractor is one company which will benefit from this  emerging scenario.Company is India’s largest manufacturer of Power Tillers and other farming equipments.This Bangalore based company having four manufacturing facilities to produce Power Tillers,Mini Tractors,Paddy Transplanters and Diesel Engines.VST had technical  collaboration with Mitsubishi Corporation,  Japan .Company developed a good marketing network  with more than 160 dealers across India .Its products are also exported to countries like Middle East, Russia , Turkey , Korea and Thailand.In power tiller segment company commanding a market share of 45% in India.Supported by robust demand ,company recently increased its production capacity.Company having a strong balance sheet with negligible debt .Even during tough times for agriculture sector company showing good performance by all parameters.In FY 2011-12 , VST Tiller reported a Sales of Rs.528 Cr , net profit ofRs.50 Cr and an EPS of Rs.58 /- . Even in a bad year for entire farming related business due to delayed monsoon ,For the nine month December 2012,company reported  a net profit of Rs.33 Cr.VST Tiller is an uninterrupted dividend payer for the past 8 years and declared 90% each in past two years.

                                                             I believe , since there is no alternative for food and the attitude of new generation youth towards farming – mechanization is the only solution to avoid food crisis in future.Hence , the potential  for farming equipments like Tillers,Tractors,Paddy trans planters,Harvesters..etc  are bright.Even the company adopted technology from foreign companies in the initial years ,VST having its own R&D facilities,good brand name and marketing  and servicing network.Considering its strong balance sheet , well experienced promoters and good potential of the industry recommending a BUY for long term investors.Stock is trading near to its 52 week low price @ Rs.340/-


Link to Company website HERE 

Link to latest AR HERE

CUMMINS INDIA - BUY

This Pune based company  is a 51% subsidiary of  Cummins Inc of USA.It is one of the largest manufacturers of Diesel Engines in India .Company’s products are used in industries like Auto,Power Generation..etc.Company having manufacturing facilities to  produce Diesel Engines with a capacity of 18 HP to 3500 HP.In fact ,Cummins is one of the biggest beneficiary of India’s  power deficit  which may  continue for many years due to lack of proper policy decisions and uncertainties related with environmental clearance issues. Company currently commanding a 35 % market share of DG set business and they are now going  to start the production of  Low Horse Power Gensets in near future.This new facility is under implementation at Phaltan with a production capacity of  50,000 gen sets which will be commissioned in next one year.Honda Siel Power is currently dominating low HP genset market .With advanced technology and well accepted brand name , Cummins is expected to give tough competition to Honda going forward.Parent Company is paying maximum attention to develop business here and planning to make India as a production hub for their overseas demand too.Company is spending large amount for R&D and established a separate wing for this purpose only.Demand for other Industrial purpose engines are also expected to improve with a revival in over all economy. 

Even in this tough business environment company reported a 30% rise in its net profit for the latest March quarter.It is one good company to be included in the core portfolio of long term investors @ CMP of Rs.520/-

Link to company website HERE