At the current market price of Rs. 124.80, the stock P/E ratio is at 9.51 x FY16E and 7.92 x FY17E respectively.

1. CMP 124.80
Target Price 142.00
ISIN: INE437D01010
JULY 14th
2015
MAGNA ELECTRO CASTINGS LTD
Result Update(PARENT BASIS): Q4 FY15
BUYBUYBUYBUY
Stock Details
Stock Data
Sector Other Industrial Products
BSE Code 517449
Face Value 10.00
52wk. High / Low (Rs.) 168.00/63.35
Volume (2wk. Avg ) 982
Market Cap ( Rs in mn.) 571.83
Annual Estimated Results (A*: Actual / E*: Estimated)
Years FY15A FY16E FY17E
Net Sales 1050.61 1218.71 1364.95
EBITDA 151.04 164.61 188.21
Net Profit 54.29 60.16 72.21
EPS 11.85 13.13 15.76
P/E 10.53 9.51 7.92
Shareholding Pattern (%)
1 Year Comparative Graph
MAGNA ELECTRO CASTINGS LTD BSE SENSEX
SYNOPSIS
Magna Electro Castings Ltd is in the business of
Manufacturing & Supplying Ferrous Components in
small and medium volumes to users worldwide.
Magna Electro Castings Ltd revenue for the quarter
rose by 26.56% to Rs. 262.21 mn from Rs. 207.18
mn, when compared with the prior year period.
Net profit for the quarter stood at Rs. 9.56 mn as
compared to Rs. 6.75 mn over the previous year
period, an increase of 41.57%.
During Q4 FY15, EBIDTA is Rs. 24.95 mn as against
Rs. 29.82 mn in the corresponding period of the
previous year.
In Q4 FY15, PBT is increased by 161.03% to Rs.
26.47 mn from Rs. 10.14 mn in Q4 FY14.
EPS of the company stood at Rs. 2.09 a share during
the quarter, registering 41.57%, increased over
previous year period.
During Q4 FY15, Foundry segment grew up by 27%
at Rs. 263.51 mn against Rs. 207.00 mn in the
previous year.
During FY15, Revenues grew by 32% to Rs. 1050.61
mn compared to Rs. 795.61 mn for FY14.
During financial year 2014-15, Net profit grew by
17% to Rs. 54.29 mn from Rs. 46.22 mn in financial
year 2013-14.
Magna Electro Castings Ltd has recommended
payment of dividend Rs. 1.80 per share (@18%) on
the Equity Share Capital.
Net Sales & PAT of the company are expected to
grow at a CAGR of 10% and 8% over 2014 to 2017E
respectively.
PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
Magna Electro Castings Ltd 124.80 571.83 11.85 10.53 1.40 18.00
MM Forgings Ltd 683.00 8244.10 41.88 16.31 3.35 60.00
Simplex Castings Ltd 47.50 284.20 1.99 23.87 0.37 0.00
Nelcast Ltd 42.55 3701.90 2.52 16.88 1.28 35.00

2. QUARTERLY HIGHLIGHTS (PARENT BASIS)
Results updates- Q4 FY15,
Months Mar-15 Mar-14 % Change
Net Sales 262.21 207.18 26.56%
PAT 9.56 6.75 41.57%
EPS 2.09 1.47 41.57%
EBITDA 24.95 29.82 -16.34%
Magna Electro Castings Ltd revenue for the quarter rose by 26.56% to Rs. 262.21 million from Rs. 207.18 million,
when compared with the prior year period. Net profit for the quarter stood at Rs. 9.56 million as compared to Rs.
6.75 million over the previous year period, an increase of 41.57%. Reported earnings per share of the company
stood at Rs. 2.09 a share during the quarter, registering 41.57%, increased over previous year period. Profit
before interest, depreciation and tax is Rs. 24.95 millions as against Rs. 29.82 millions in the corresponding
period of the previous year.
Break up of Expenditure
Particulars
Rs. Million
Q4 FY15 Q4 FY14
%
Change
Cost of Material
Consumed
92.15 78.83 17%
Employee Benefit
Expenses
22.57 15.17 49%
Other Expenditure 108.18 94.87 14%

3. Segment Revenue
Company Profile
Magna Electro Castings was incorporated in 1993 as a Public Company. Magna is in the Business of
Manufacturing and Supplying Ferrous Components in small and medium volumes to users worldwide. The
company operates through two segments, Foundry and Wind Energy.
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.
Magna has established warehousing in the USA, this facility along with bi-weekly container shipments, allows
catering to low volume requirements. Also the company’s warehousing capability enables to supply products just
in time, to customers in the United States of America.

4. Financial Highlight (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Million)
Balance Sheet as at March 31, 2014 -2017E
FY14A FY15A FY16E FY17E
EQUITY AND LIABILITIES:
Shareholders’ Funds:
Share Capital 45.82 45.82 45.82 45.82
Reserves and Surplus 319.02 363.38 423.54 495.75
A. Sub Total - Net worth 364.84 409.20 469.36 541.57
Non-Current Liabilities:
1) Long-term borrowings 52.69 29.39 26.45 24.33
2) Deferred Tax Liabilities [Net] 43.18 51.97 59.25 65.76
B. Sub Total - Non-Current Liabilities 95.87 81.36 85.70 90.10
Current Liabilities:
1) Short-term borrowings 107.60 147.18 167.79 187.92
2) Trade Payables 121.60 136.49 147.41 157.73
3) Other Current Liabilities 39.79 34.10 35.81 37.24
4) Short Term Provisions 20.67 16.82 17.83 18.72
C. Sub Total-Current Liabilities 289.66 334.59 368.83 401.61
Total Liabilities (A+B+C) 750.37 825.15 923.88 1033.27
Non-Current Assets
1) Fixed Assets 407.15 409.38 433.94 455.64
2) Long Term Loans and Advances 13.98 16.43 18.40 20.24
D. Sub Total - Non-Current Assets 421.13 425.81 452.34 475.88
Current Assets:
1) Short-term borrowings 71.66 67.21 73.93 79.85
2) Trade Payables 198.72 249.46 295.59 357.72
3) Other Current Liabilities 8.60 13.46 16.69 19.53
4) Short Term Provisions 45.31 65.69 81.46 96.12
5) Short-term borrowings 4.95 3.52 3.87 4.18
E. Sub Total-Current Assets 329.24 399.34 471.54 557.39
Total Assets (D+E) 750.37 825.15 923.88 1033.27

5. Annual Profit & Loss Statement for the period of 2014 to 2017E
Value(Rs.in.mn) FY14A FY15A FY16E FY17E
Description 12m 12m 12m 12m
Net Sales 795.61 1050.61 1218.71 1364.95
Other Income 7.69 4.51 4.96 5.31
Total Income 803.30 1055.12 1223.67 1370.26
Expenditure -650.83 -904.08 -1059.06 -1182.05
Operating Profit 152.47 151.04 164.61 188.21
Interest -25.80 -23.18 -25.27 -27.03
Gross profit 126.67 127.86 139.35 161.18
Depreciation -69.56 -44.16 -46.37 -50.08
Profit Before Tax 57.11 83.70 92.98 111.10
Tax -10.89 -29.41 -32.82 -38.88
Net Profit 46.22 54.29 60.16 72.21
Equity capital 45.82 45.82 45.82 45.82
Reserves 319.02 363.38 423.54 495.75
Face value 10.00 10.00 10.00 10.00
EPS 10.09 11.85 13.13 15.76
Quarterly Profit & Loss Statement for the period of 30th Sep, 2014 to 30th June, 2015E
Value(Rs.in.mn) 30-Sep-14 31-Dec-14 31-Mar-15 30-Jun-15E
Description 3m 3m 3m 3m
Net Sales 310.88 249.52 262.21 291.05
Other income 1.09 1.12 1.30 1.37
Total Income 311.97 250.64 263.51 292.41
Expenditure -258.15 -216.16 -238.56 -252.92
Operating profit 53.82 34.48 24.95 39.49
Interest -5.53 -5.60 -6.82 -7.71
Gross profit 48.29 28.88 18.13 31.79
Depreciation -17.50 -17.50 8.34 -12.95
Profit Before Tax 30.79 11.38 26.47 18.84
Tax -7.50 -2.50 -16.91 -5.84
Net Profit 23.29 8.88 9.56 13.00
Equity capital 45.82 45.82 45.82 45.82
Face value 10.00 10.00 10.00 10.00
EPS 5.08 1.94 2.09 2.84

6. Ratio Analysis
Particulars FY14A FY15A FY16E FY17E
EPS (Rs.) 10.09 11.85 13.13 15.76
EBITDA Margin (%) 19.16% 14.38% 13.51% 13.79%
PBT Margin (%) 7.18% 7.97% 7.63% 8.14%
PAT Margin (%) 5.81% 5.17% 4.94% 5.29%
P/E Ratio (x) 12.37 10.53 9.51 7.92
ROE (%) 12.67% 13.27% 12.82% 13.33%
ROCE (%) 42.28% 33.32% 31.79% 31.61%
Debt Equity Ratio 0.44 0.43 0.41 0.39
EV/EBITDA (x) 4.75 4.87 4.55 4.06
Book Value (Rs.) 79.62 89.31 102.43 118.20
P/BV 1.57 1.40 1.22 1.06
Charts

7. Outlook and Conclusion
At the current market price of Rs. 124.80, the stock P/E ratio is at 9.51 x FY16E and 7.92 x FY17E
respectively.
Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs. 13.13 and Rs.
15.76 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 10% and 8% over 2014 to 2017E
respectively.
On the basis of EV/EBITDA, the stock trades at 4.55 x for FY16E and 4.06 x for FY17E.
Price to Book Value of the stock is expected to be at 1.22 x and 1.06 x for FY16E and FY17E respectively.
We recommend ‘BUY’ in this particular scrip with a target price of Rs. 142.00 for Medium to Long term
investment.
Industry Overview
The Indian foundry industry is well established, with about 4500 units, out of which about 80% of the units are
in the small scale sector and the balance in the medium and large scale sectors, catering to international
standards. The Indian foundry industry is the world's third largest producer of castings, next only to China and
USA. The vital role being played by the industry can be gauged by the fact that it is poised to become a USD 19.2
billion industry by the year 2016 and offering employment opportunities to about 1 million.
Opportunities and Threats
The demand for castings is increasing the world over, though at the moment with the major economies going
through a recessionary period, the growth is not as expected. However the situation is expected to show
improvement in the coming quarters, both in the domestic and international markets. With the Government's
commitment to improve the infrastructural facilities, especially in key sectors like power, the demand for
castings is expected to go up. The threat of more players entering the market should also be monitored so that
the Company does not lose out to competitors.
Outlook
The general recessionary trend, both in the international as well as the domestic markets, continued to affect
most of the industries, especially auto, pump and valves, which were the most affected. There seems to be a
marginal improvement during the last year and it is hoped that the market will pick up momentum gradually
during the current financial year.

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in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
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the recipients’ investment decision based on this document.

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