Monday, June 24, 2024
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HomeStocksMazda Ltd: A Multibagger Stock with a Promising Future

Mazda Ltd: A Multibagger Stock with a Promising Future

Introduction:

Mazda Ltd, a renowned engineering company in India, has emerged as a multibagger for investors, witnessing a staggering surge of 126% in stock value over the past three years. In this analysis, we delve into Mazda’s business operations, recent developments, and its potential for continued success.

About Mazda Ltd:

Mazda is engaged in the business of manufacturing engineering goods. The company’s ambitious vision is to become a global leader in designing and manufacturing engineered equipment. While Mazda primarily focuses on exports, it is striving to increase its domestic contribution, which reached 18% in FY 22-23.

Recent Stock Performance:

On a recent Tuesday, Mazda Ltd’s shares surged by an impressive 13%, accompanied by a substantial increase in trading volume, propelling the stock to a fresh 52-week high.

Business Segments:

Mazda operates through two key divisions: Engineering and Food Business.

  1. Engineering Division:
  • Mazda’s Engineering division is thriving, securing orders from diverse industries including power, edible oil, and chemicals.
  • In the past 6-8 months, Mazda has also clinched orders from refineries, petrochemical companies, and the steel industry.
  • The company’s overseas business, primarily conducted with Croll-Reynolds, is performing well, with exports showing robust growth compared to the previous year.
  • Despite a slightly above-average year, Mazda remains cautious about the future due to a slowdown in the pace of inquiries and projects.
  1. Food Business:
  • Mazda’s Food Business division has recently expanded its facilities in response to surging demand for its products.
  • By the year 2023-2024, the company anticipates resuming full-scale production at its new facility.
  • Management is optimistic about the increased capacity to handle more orders and scale up production.
  • In addition to facility expansion, Mazda has strategically invested in enhancing its human capital.
  • Order Book and Product Range:

Mazda boasts a healthy order book encompassing products across various segments, including vacuum, evaporators, chillers, heat transfer, air pollution control, and food products. The company is also a key supplier to Indian refineries, a burgeoning segment in the Indian market.

Currently holding a market share of 30-35% in the vacuum segment and 10% in the evaporator segment, Mazda is actively developing new products unfamiliar to the Indian market, such as nano bubblers, freeze crystallization, and anti-scaling solutions. The company is confident that these innovations will bolster its revenue by an impressive 10% this year.

Challenges Ahead:

While Mazda Ltd stands well-positioned to capitalize on the escalating demand for engineered equipment both domestically and internationally, it faces challenges in the form of heightened competition that could exert pressure on margins. Additionally, the company remains reliant on exports, rendering it susceptible to the volatile conditions prevailing in the global export market

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