INDIA MOTOR PARTS LTD-- IMPAL

IMPAL CMP 680,BSE CODE 590065

INDIA MOTOR PARTS IS A TVS GROUP COMPANY WHICH TRADES BRANDED SPARE PARTS OF AUTO ANCILLARIES IN THE REPLACEMENT MARKET.  IT HAS TIE UP WITH VARIOUS AUTO ANCILLARIES COMPANIES TO SELL THE BRANDED PARTS.

OVER THE PAST FEW YEARS, STRONG GROWTH IN THE SALES OF AUTO SECTOR HAS CREATED A WONDERFUL OPPORTUNITY FOR A COMPANY (ONE OF A KIND) LIKE IMPAL.

THERE HAS BEEN INCREASING AWARENESS AMONG CONSUMERS TO GO FOR BRANDED SPARES FOR THE PURPOSE OF REPAIRING THEIR VEHICLES DUE TO BETTER QUALITY AND INCREASED LIFE OFFERED BY THESE PRODUCTS.

THE BEST THING ABOUT THIS COMPANY IS THAT EVEN IF DUE TO INFLATION AND OTHER ISSUES RELATED TO SLOWDOWN ETC WHEREIN THERE IS SLOWDOWN IN THE AUTO SPACE, THIS COMPANY WILL CONTINUE TO GROW CONSISTENTLY BECAUSE THERE WILL BE MORE FOCUS AMONG CONSUMERS TO GO FOR FREQUENT REPAIRS IN THEIR VEHICLES INSTEAD OF PURCHASING NEWER VEHICLES DUE TO LESSER SPENDING POWER.  PLUS WITH INCREASED AWARENESS OF THE BENEFITS OF BRANDED HIGHER QUALITY SPARES, THERE ARE INCREASED GROWTH PROSPECTS FOR THE COMPANY.

AND IF THE AUTO SALES INCREASE, THEN ALSO THIS COMPANY ENJOYS MORE NUMBER OF CUSTOMERS FEW YEARS DOWN THE LINE.

A LOOK AT THE FINANCIALS OF THE LAST FEW YEARS SHOWS CONSISTENT GROWTH BY THE COMPANY. PLUS THERE HAS BEEN GOOD REWARD FOR THE SHAREHOLDERS IN TERMS OF CAPITAL APPRECITAION AND HIGHER DIVIDENDS.

EQUITY IS SMALL AT 4.16 CRORE WITH AROUND 41 LAC SHARES OUTSTANDING. PROMOTER HOLDING IS AT 52%. MARKET CAP BASED ON CMP IS AROUND 281 CRORES.

YEAR	06	07	08	09	10	11
SALES	207	227	244	300	358	429
% GROWTH		10%	7.5%	26.2	19%	19.83%
OP	14.5	17	18.18	26	37.29	40.8
NP	9	10.8	12	17.37	24.75	28.17
% GROWTH		20%	10%	44%	42.6%	13.8%
EPS	20.8	25	27.24	40	59	67.7

COMPANY HAS DECLARED (INTERIM) DIVIDEND OF RS 17 PER SHARE.

COMPANY HAS ALL THE ATTRIBUTES OF A RETAIL STORY AVAILABLE AT REASONABLE VALUATION.

POSITIVES:

1.       LOW CAPEX BUSINESS MODEL

2.       CONSISTENT GROWTH

3.       REASONABLE VALUATIONS OF A PE OF AROUND 10 BASED ON LATEST RESULTS.

4.       CONSISTENT FREE CASH FLOW GENERATION.

5.       INCREASING DIVIDENDS OVER THE YEARS

6.       ALL THESE YEARS, THE GROWTH HAS BEEN ACHIEVED WITHOUT EQUITY DILUTION OR INCREASING DEBT.

7.       HEALTHY RETURN RATIOS

NEGATIVES:

1.       UNLESS THE MANAGEMENT AGGRESSIVELY RAMPS UP OPERATIONS IN DIFFERENT REGIONS, EXPLOSIVE GROWTH MIGHT NOT OCCUR.

2.       COMPANY MIGHT BE EXPOSED TO SOME ISSUES LIKE DEBTORS ETC.

3.       THREAT OF COMPETITION EXISTS.

4.       VERY POOR LIQUIDITY