Tuesday, April 5, 2016

Buy Force Motors CMP: Rs.3,014.50 Target: Rs.3,275-3,510

Force Motors is a Pune based company engaged in the manufacture of LCVs, SCVs, utility vehicles, agricultural tractors and other products related to automobile industry such as diesel engines. It has currently five plants in India, one each in Akurdi and Urse, Pune; Pithampur, Madhya Pradesh; Mahindra World City, Tamil Nadu; and Chakan, Pune.

Force Motors has reported improving numbers over the last few quarters driven by higher contribution from outsourcing of components by international giants and better performance from its core automobile business. Most of the vehicles produced by the company are now BS4 compliant and company is focusing on BS5-compliant platforms.

Currently, the company operates with an annual capacity of 36,000 vehicles a year in Traveller and Trax, equally distributed. Management expects CV cycle to pick up from Q4FY16 and sees good growth prospects for the next few years. For FY16, the planned capex is about ₹400 crore predominantly on product development, new generation smart vehicles, increase in tooling business and OEM (original equipment manufacturer) capacity addition.

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