Bets By Large Funds Drive Honda Siel Shares Higher

Shares of Honda Siel Power Products Ltd. rose the most in more than two months after two large funds bought stakes in power products maker in less than one week.

The stock gained as much as 5.9 percent to Rs 1,440 on the National Stock Exchange. Its trading volume today jumped 63.6 times its 20-day average, Bloomberg data showed.

On Tuesday, Kenneth Andrade-backed Old Bridge Capital bought 65,503 shares of Honda Siel at Rs 1,347.8 each. That came within a week of Reliance Mutual Fund acquiring 89,800 shares at Rs 1,350 apiece.

A Quick Analysis Of Honda Siel

The company, a joint venture between Japan’s Honda Motor Company and India’s Siel Ltd., manufacturers portable generating sets, internal combustion engines, pumping sets, water pumps and spare parts.

Strengths

• Multinational company with strong parent Honda Motor Company
• Debt-free with cash surplus of Rs 142 crore
• Products cater to wide range of uses in agriculture and rural segments
• Leader in the field of portable generators with sales done via over 600 dealers
• Technological advantage from parent Honda Motor
• Government push towards rural and agriculture bodes well for the company
• Valued at 24x compared to industry peers at 30-40x

Weakness

• Low dividend yield
• Low return ratios compared to peers