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Just before the general election , many investors are searching for stocks which may out perform if a stable government came to power .Since the uncertainty about the outcome is higher we should think about the opposite side too. What I means is , we should select stocks which will not under perform if the next government is not a a stable one ,too.Considering both these situations and the recent run up in many sectors like Engineering,Infrastructure ..etc ,it is not an easy task to select a good stock for this purpose.But still there is few stocks available at reasonable valuation which may out perform in a positive election outcome but will not fall much even if there is any negative outcome.This week let us look into one such stock – Kirloskar Oil Engine.
Kirloskar Oil Engine (KOEL) - is the flagship company of Kirloskar group . Company is the leader in diesel engines,agricultural pump sets and generators.Company’s operations are broadly classified into four divisions – power generation,Large Engines,Industrial engines and agri related.Company is a trusted name in power generator business with its most popular brand ‘Kirloskar Green’ Genset .In this series company manufacturing gensets with ranges varies from 5 Kva to 3000 Kva. Large engine division catering mainly shipping industry and marine applications and manufacturing propulsion engines (Product range 1060 KWm to 3020 KWm ) .In the agriculture division company supplying diesel engines and pump sets ranging from 3 hp to 130 hp. Company also making industrial engines in 20 hp to 800 hp category for industrial applications in mining,material handling ,construction,fluid handling ..etc. Even if many of these industries were in bad shape due to policy paralysis and general recession ,company reported consistent performance . After establishing leadership position in large gensets ,company recently introduced portable gensets in the lower KVA range.Company also taking efforts to increase its export which increased 20 % in last year.
KOEL is a company with strong balance sheet and good return ratios .It is a zeo debt company with good operating cash flow . Company declared 250 % dividend last year .Promoters holding close to 73 % stake and another 14 % held by large investors.In last FY ,company reported a top line of Rs.2357 Cr and a net profit close to Rs.200 Cr .
Recommending Kirloskar Oil Engine as my pre-election pick @ CMP Rs.182 .Stock listed in both exchanges.
Link to Company website HERE
Disc: It is safe to assume that I have vested interest in KOEL