Hitachi Home with 70% stake held by Hitachi has shown good performance for FY 07 with sales of Rs 325 crores, EBITDA of Rs 29.18 crores, PBT of Rs 22.22 crores and PAT of Rs 19.33 crores, resulting into an EPS of Rs 8.42 on equity base of Rs 22.96 crores.

The company is into manufacturing of full range of Air-conditioners with Room Air-conditioners and Package Type Air-conditioners as its main range. The company has come in profit in FY 05 and since then its performance has been continuously on rise. For FY 05, EPS was at Rs 2.48, for FY 06 it was at Rs 6.47 while for FY 07 it was at Rs 8.42.

The company is now almost a debt free company with an installed capacity to manufacture 1.50 lakh air-conditioners per annum. The April-June quarter of the company is always robust due to good sales in summer. Air-conditioning industry is showing fastest growth in India and Hitachi has rightly capitalized on this growth with increase in topline and bottomline. Margin expansion was the main focus of the company whereby its EBITDA, which was negative in FY 04, rose to 5.3% in FY 05, to 8.97% in FY 07, which is in line with the industry peers like Blue Star, Fedders Lloyd etc.

The FY 08 may have topline of Rs 400 crores and bottomline of close to Rs 25 crores giving an EPS of Rs 11. The share, now ruling at around Rs 100 is thus available at a PE multiple of 9. Blue Star, Fedders Lloyd and Voltas are ruling at a forward PE multiple of 16 to 18. Considering this, share looks attractive at around Rs 100 levels, and can give a return of 40% in next 12 months.

Disclaimer: The writer may be deemed to be concerned or interested in the recommendation as he and his clients are invested in this scrip.

Disclaimer: The writer may be deemed to be concerned or interested in the recommendation as he and his clients are invested in this scrip.