There is a merger pending for this company.
Amtek Auto is going to merge with 5
Of this, 3 are unlisted.
Amtek Ring Gears
Post-merger, the company will have 22.41 crore shares
outstanding compared to current 14.1 crore shares.
If we consider the combined entity, the eps for last 4 quarters works out to be around Rs 21.25
(excluding extra-ordinary items).
This is the figure mentioned at the Amtek Auto's website.
At Rs 174, the stock is available at around 8 times TTM (Trailing Twelve Months) earnings.
Many other auto ancillary stocks are trading at similar valuations.
Post-merger, AmteK Auto will be one of biggest auto ancillary company in India, with sales of around $1 billion.
Amtek is also expanding the capacities of its various plants.
This year is expected to be difficult for auto stocks as rising interest rates and inflation will have a negative impact on volumes.
Thus, I feel Amtek Auto may have some more downside left.
6-7 times trailing earnings should be a good entry point (Rs 130 - Rs 150).
One can expect good returns in the next 3-5 years, but nothing extraordinary.
My guess is that this stock can give around 20%-25% CAGR over the next few years.