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This company with a diversified auto ancillary portfolio has been quietly creating wealth for investors for some time now.
Take this: An investment of just Rs 10,000 in Rane Holdings on April 1, 2013 would have become over Rs 1,50,000 today.
Both fundamental and technical analysts believe the ongoing momentum on the stock has a lot of steam left.
The government plan to make airbags compulsory in the near term will be a huge bottom line booster for Rane Holdings.
The company offers an entire range of steering products – mechanical steering, hydraulic power steering (HPS), and electric power steering (EPS) – through its subsidiaries and JVs, such as Rane Madras ( (RML), Rane TRW Steering System (RTSSL) and Rane Steering Systems (RNSSL).
With expectations of airbags becoming mandatory for any type of PVs in India over the next one or two years, airbags could be a strong growth opportunity for RTSSL.
Due to its existing relationship with OEMs and technology support from TRW, RTSSL should be able to capture a major chunk of that opportunity, says domestic brokerage Chola Securities.
Shares of Rane Holdings (RHL) have jumped 1,430 per cent to Rs 2,449.65 as of March 28, 2018 from Rs 160.10 on April 1, 2013.
Benchmark Sensex has risen 75 per cent in the same period.
Rane Holdings’ revenues are estimated to grow at 18 per cent CAGR over the next two years.
An upsurge in OEM (original equipment makers’) volumes and focus on aftermarket segment should drive the company’s topline, says Chola Securities.
The company’s earnings are estimated to grow at a CAGR of around 22 per cent over FY18-20E.
Return ratios are also estimated to expand due to margin improvement and reduction in leverage.
Chola has a ‘buy’ rating on the stock with a target price of Rs 3,183.
For the quarter ended December 31, 2017, the company posted a consolidated net profit of Rs 45.50 crore, up 108 per cent from Rs 21.35 crore reported for the corresponding quarter last year.
Net sales increased to Rs 570.05 crore from Rs 524.63 crore.
The company has more than doubled its bottom line during the financial year ended March 31, 2017, reporting a net profit of Rs 136.82 crore for FY17 against Rs 65.54 crore a year ago and Rs 71.72 core five years back in FY12.
Net sales have jumped 10 per cent annually (CAGR) over the past five years.
As of March 31, 2017, the company’s debt-to-equity ratio stands at 0.06, with total debt of Rs 15.19 crore.
Rane Holdings aims to growth the share of international business from 21 per cent of revenue in FY17 to 25 per cent by FY20E.
Group’s international revenue, from global OEMs and international aftermarket, grew 60 per cent YoY to Rs 924 crore in FY17.
With a rally of up to 900 per cent, other group firms including Rane (Madras), Rane Brake Lining and Rane Engine Valve have also delivered multibagger returns to investors over the past five years.
Shares of Rane Brake Lining have jumped 894 per cent to Rs 934.80 as of March 28, 2018 from Rs 94.05 on April 1, 2013.
Rane (Madras) and Rane Engine Valve have climbed 603 per cent and 204 per cent, respectively in this period.
The company management is exploring multiple avenues such as strengthening of USA business with more hirings, stepping up direct exports to OEMs, taking assistance of JV partners to boost overseas sales and fast establishing presence in global replacement markets.
Institutional investors look bullish on the stock.
Domestic fund houses like Sundaram Mutual Fund, UTI Mutual Fund and LT Mutual Fund held nearly 10 per cent stake in the company as of December 31, 2017, shareholding data shows.
The stock is looking good on technical charts, says Milan Vaishnav, Technical Analyst, Gemstone Equity Research and Advisory.
The stock presents a buoyant picture for short to medium term.
After sideways consolidation for almost a year and a half, the stock is in an upward rising channel for almost two years now since mid-2016.
It has rebounded from the 20-period moving average and shown resumption of the upward move.
The lead oscillators are favourably placed and the stock seems to have 10-12 per cent upside potential, says Vaishnav.
Mazhar Mohammad, Chief Strategist – Technical Research Trading Advisory, Chartviewindia.in said the counter is throwing up a lucrative target placed around Rs 3,200.
This stock was not affected much in the severe correction of last two months, suggesting bulls’ high conviction level on the counter.
Investors can keep stop loss below Rs 2,240 on a closing basis, Mohammad said.
