Detailed Analysis on Magna Electro Castings Ltd

 

Market Cap : 192 Cr

Current Price (04-05-2024) : 453

Sector : Castings & Forgings

BSE  : MAGNAELQ

Website : magnacast.com

About :

Incorporated in 1990, Magna is in the Business of Manufacturing and Supplying Ferrous Components in small and medium volumes to users worldwide. Magna specializes in the manufacture of Ductile Iron and Gray Iron casting in the weight range of 300 grams to a maximum of 2000 Kilograms. Magna also adds value by heat treatment, surface treatments and machining so that the products are ready to assemble.

Magna also produces fully machined components, utilizing its in-house CNC machine shop and other facilities as well. Magna has extensive experience in the supply of safety requirement components in the casting and fully machined forms. The components meet stringent requirements in terms of Radiographic Quality and Metallurgical Control.

Financial Metrics :

(source : screener.in)

  • Market Cap : 192 Cr
  • Current Price : 453.00
  • High / Low : 594 / 310
  • Book Value : 238.00
  • EPS : 32.50
  • Promoter Holding : 53.38 %
  • Pledged Percentage : 0.00 %
  • P/E Ratio : 13.90 (Industry PE : 29.10)
  • PEG Ratio : 0.78
  • Operating Profit Margin : 15.00 %
  • Return on capital employed (ROCE) : 24.10 %
  • Return on equity (ROE) : 18.10 %
  • Return on assets (ROA) : 13.80 %
  • Sales Growth 5Yr : 12.10 %
  • Profit Growth 5Yr : 17.90 %
  • Dividend Last Year : 3.00
  • Dividend Yield : 0.66 %
  • Debt : 0.14 Cr
  • Debt to Equity : 0.00
  • Debtor Days FY23 : 85
  • Current Assets : 79.60 Cr
  • Current Liabilities : 27.70 Cr
  • Free Cash Flow : 8.11 Cr
  • Net Cash Flow : 1.33 Cr

Please refer to this article for detailed explanation on above mentioned financial metrics


Earnings :

(source : screener.in)

Quarterly

Yearly 

Sales growth 
  • Over the last 5 years sales has grown at a yearly rate of  12 %
  • Over the last 3 years sales has grown at a yearly rate of  20 %
Good net profit growth
  • Over the last 5 years net profit has grown at a yearly rate of  18 %
  • Over the last 3 years net profit has grown at a yearly rate of  33 %
 Return on equity
  • ROE last year  18 %
  • Over the last 5 years ROE has grown at a yearly rate of  13 %
  • Over the last 3 years ROE has grown at a yearly rate of  12 %
Good return on capital employed
  • ROCE last year  24.10 %
  • Over the last 5 years ROCE has grown at a yearly rate of  16.40 %
  • Over the last 3 years ROCE has grown at a yearly rate of  15.90 %
Operating profit margin
  • Last Year OPM  16 %
  • 2022 OPM  10 %
  • 2021 OPM  10 %
Manufacturing Facility :


The company has its manufacturing unit located in Coimbatore, Tamil Nadu. having state-of-the-art manufacturing facilities , which covers the process of manufacturing Castings, Machining. there manufacturing facilities includes Foundry, Machine Shop, Paint Shop, and Inspection. they have a strong network of more specialized vendors to manufacture metal & non-metal products.

Casting Facilities




The workshop is a 25000sqm facility built in 1994 and houses state-of-the-art pattern-making,Sand Plant, Coreshop, Melting, Green Sand Moulding, Furan Fast Loop Line , Heat Treatment, and Fetting facilities. Installation of a 1000 kW/1000 Hz Tri Track Inductotherm steel shell furnaces of 3.6 tons capacity. Tri track is selected to augment and improve utilization factor by reducing the idle time. From the single electrical power unit power varying from 0 to 100% can be simultaneously given to three furnaces. Tri Track Medium frequency induction melting furnace is the Maximizing Melting at the Lowest Power Demand concept. The new Hunter XL capable of producing up to 180 molds / hr (dry cycle) is about 50% faster than the Hunter HMP 20 E, which it is replacing. The mold size is 600 mm x 500 mm x400 mm, identical to the Hunter HMP 20 E machine. Squeeze pressure is 10 Kg/Sq.cm, so that, to produce high quality molds more efficiently and within closer tolerance. Auto lock quick pattern change system with hydraulically operated piston style clamping, eliminates pattern bolt down time allowing true drop in pattern changes. New Core shop has the capacity of 1,00,000 lakh shoots per month. RFID tags are fixed to all core boxes and the relevant process parameters are programmed for each tag. This core shop has been fitted with a new Laempe mixer which can handle from 50 kg per batch and produce 5 Tons per hour. This mixer can handle any no of recipe to suit individual core requirements to have a better control on the core quality.

Machining Facilities


Machining Division has modern hi-tech CNC machines capacity of 24 CNC machines, catering to wide range of industries including Agriculture, Automotive, Flow Control, Hydraulics, Locomotives, Off Highway and Trucking. Machines include Horizontal Machining Centers, Vertical Milling Centers and Vertical and Horizontal Lathes. Our Machine shop has Robust Fixture design capabilities using Solid works software and is backed up with EdgeCAM software capable of programming Milling, Turning and Mill-Turn machines to eliminate manual error in CNC Programming. We have capability to design both Hydraulic and Manual fixture to suit the Production volumes. All CNC Machines are connected through an Online UPS to take care of disruptions in Electric Power and the Plant is backed up by a 600 KVA Diesel Genset.

Process Facilities


Accredited metallurgical laboratory, non-destructive testing and metrology departments have facilities to carry out OES, combustion and gas fusion chemical analysis, hardness testing, microstructural examination, sand testing, radiography, dye penetrant, magnetic particle, ultrasonic inspection, Fully Automatic Brown & Sharpe CMM and laser scanning.

Products :

Castings
  1. Bearing Cap
  2. Frame Head
  3. Linear Yoke
  4. Pedestal
  5. Push Rod
  6. Valves
  7. Valve Bodies
Machining
  1. Diffuser
  2. Upper Cover
  3. Sliding Sleeve
  4. Air Manifoder
  5. Axial Bearing
  6. Bearing Cap
  7. Rocker Bracket
  8. Coupling Yoke
Speciality Products
  1. Austempered Ductile Iron Part
  2. Brg Brush with Steamless Tube Pipe
  3. Exhaust Manifold
  4. Jounal Box Adaptor
  5. Turbo Charger Castings
  6. Ductile Iron Valve with SS ring
These Products are used in various industries such as Automotive, locomotive, windmill, transmission, valves industries.

Magna has Four Wind Electric Generators with a total installed capacity of 4000 KW. This two generators are capable of generating 60-70% of the total annual power requirements of Magna.

The Company's Rain Water Harvesting facility can harvest about 1.50 million liters of rain water.

Magna has established warehousing in the USA, this facility along with bi-weekly container shipments, allows them to cater to low volume requirements. Also warehousing capability enables them to supply products just in time, to customers in the United States of America. Magna proposes to establish similar facilities to provide the same to the European consumers in the year 2006.

During 2021-22, it installed new 1 Ton Capacity induction melting furnace to enhance its existing furnace capacity. During 2022-23, it installed some balancing equipments/machinery which will enhance the production activities of the Company. Civil works were undertaken to increase the floor space of the finishing division and machine shop. Roads were also laid/ re-laid to facilitate easy of movement of vehicles inside the Plant.

The Company has procured land of 1.80 acre near the plant for future use.

Industry Insights :

(source : genieglobalgroup.com)


Casting is one of the key engineering segment supplying various components to end-user industries. No industry product can be considered complete without the process of casting.


Currently, India is the world’s 3rd largest casting producer and is expected to open more opportunities for casting industries both for domestic production and for exports.


Casting is one of the major engineering segments supplying various components to industries such as Automobile, Defence, Aerospace, Petrochemicals, Oil & Gas, Power, FMCG, Marine, Paper, Chemicals & Fertilizers and Mines. The Indian Casting industry have gone through up-gradation to be in synchronization with the international practices. Given the enormous potential, frontline domestic players have started building up world-scale capabilities by either putting up Greenfield projects or acquiring sick global facilities and turning them around as business solutions for setting up a foreign business in India.


Casting is highly suitable for the mass production of a certain industrial component as the same mould can be reused. Research indicates that the Indian metal casting industry is expected to reach $17,608.2 million by 2028 a 6.7% CAGR during 2023-2028.

PROS :
  1. Company with no debit.
  2. Company with good promoter holding and zero promoter pledge.
  3. Company is maintaining healthy dividend payout.
  4. Positive free cash flow and net cash flow.
  5. Generating good ROCE,ROE.
  6. Company is improving debtor days (109 in FY21 to 85 in FY23)
  7. Stock is trading at 1.91 times its book value.
  8. Stock PE is less than industry PE.
CONS :
  1. Decline in Sales and Net Profit compared to previous year
This is not a buy/sell advice I am not SEBI registered, just providing basic details regarding this company from various sources available online, please do your own research or consult a SEBI registered investment advisor before taking any investment decision.

Thank You for reading this article if you liked this one please visit next week again for analysis on another new stock.

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