SIMMONDS MARSHALL LTD – One Of The Best Bets In Auto-Components Sector


We know that last five years have been like a plague for Indian Economy for reasons more than one, but as they say, tough times never last but tough people do. Therefore, if there’s a dividend paying company that has grown at a CAGR of more than 25% in both topline and bottomline during these five years in stark contrast to its peers who have mostly de-grown and the largest peer (Sundram Fasteners considered a bluechip by many) has hardly managed a single digit CAGR we take notice, but what if I tell you that inspite of being in a relatively capital intensive industry, this manufacturing company has recorded an average 5 year RoCE of around 25% and average five year RoE at more than 23% then we take serious note of this…and if I tell you that out of these 5 yrs one year has been of de-growth for the industry then its achievements become even more glaring (yes I agree, the success in light of challenges faced reminds us of Freshtrop Fruits). But the opportunity becomes even more attractive when you know that this gem is available at around seven times FY 15 EPS whereas the so called bluechip is trading at around 22 times FY15 EPS.


Background: Simmonds Marshall’s main business is industrial fasteners used in auto and engineering industry. Simmonds was incorporated as a Private Limited Company in technical and financial collaboration with Firth Cleveland Fastenings Ltd., U.K. holding 51% of the equity of the company. This shareholding was diluted progressively and the balance of foreign holding was purchased fully by the current promoters in 1987. The company’s promoters are one of the most reputed and financially strong business houses of pune. The company supplies a range of Specialised Nylon Insert Self Locking Nuts and other Special Fasteners to all the two-wheeler manufacturers in the country and almost all major four-wheeler manufacturers in the country. The company does not focus too much on the CV segment as of now. The company had started focussing on exports some time back and the results have been very encouraging. Now the company plans a major thrust on exports which also gives natural hedge to the company, along with much better margins. The company has also been successful in acquiring new customers and also getting bigger orders from existing clients by wresting away orders from its bigger peers.


Valuation: This dividend paying company is currently trading at just 7 times forward PE, whereas others like sundram fasteners are trading at 22 times forward PE (also simmonds is trading at just 0.65 times its FY14 sales as opposed to Sundram that is trading at around 4 times FY 14 sales). The company, in the first two quarters has given a net profit of almost entire last year. The first quarter net income was severely affected by deferred tax which was again a one time hit (inspite of this the company has given almost entire last year’s profits in first two quarters itself) and therefore, the second quarter was excellent both on operating income as well as net income and the same is expected for third and fourth quarter as well .Given a very strong order book, no capex for next couple of years (its working at a 55% utilization as of now) and declining debt, Simmonds is expected to grow its topline at a 30% CAGR and bottomline at 35% CAGR for next two years..

Considering how well they have grown in last five years when the economic down cycle was going on and especially when one of those years was a year of de-growth for the industry it operates in and considering the tremendous growth anticipated for the industry, this small cap has all the ingredients of becoming a big multi-bagger and is a must have for anyone interested in having an auto-components story in his/her portfolio. In today’s time when there’s hardly any value left in the markets plus given the massive valuation gap between Simmonds and its larger peer and given the much higher growth coming for Simmonds, the time is ripe for Simmond’s massive re-rating.

Technicals: The stock has broken out after almost 5 yrs of consolidation and given two successive weekly closes above its breakout point of 59.5 rs. The stock is looking rock solid and given the strong earnings growth and PE re-rating, the stock can go up multi-fold in times to come.

Note: I have always been very cautious of this sector and therefore, I tried to be very sure of the company that I select in this sector. Hence, when the first quarter results were announced and the company told me that the deffered tax effect would not recur, i wanted to wait for another quarter to see if company indeeds delivers on what it promises (and yes it did) and given that it has concided with a multi-year breakout and with my subsequent second round of interaction with the company, my confidence has increased multi-fold. I believe the sector is poised for major growth in years to come and therefore, if we are in the right company, the gains would be substantial. The management’s body language is extremely confident and optimistic and given their proven capital allocation skills, I believe we might have just another winner on our hands.

God Bless !!!

This entry was posted in Stocks. Bookmark the permalink.

198 Responses to SIMMONDS MARSHALL LTD – One Of The Best Bets In Auto-Components Sector

  1. ravi says:

    thanks for your another great pick . sir what your view of indian hume pipes , past few quarters company has posted excellent results . can it be buy opportunity at current level ?

  2. mesh says:

    hi sir
    once again this stock will open at 77 like cybertech & 20% UP FROM LAST closing WILL CHANGE PRICE TO EARNING RATIO + COST OF INVESTMENT ….

  3. Ravi multani says:

    good pick ace
    I think this time people vl less enthusiastic bcoz of cybertech…those who holds in big quantity vl push this stock to 20 to 30 percent high and then they vl offload their holdings…then struggle vl start for us (retail investors or trader)…there vl b question at what price v vl buy in everyone mind…I m not criticising u but telling general thing…I m big fan of u and I salute u for giving this type of stocks which vl b great in long term….god bless

  4. Ravi multani says:

    dear ace
    I agree that prima is still 25 percent higher but for whom it is 25 percent higher….all ur follower got it 53 plus…nobody is making profit…I m holding big quantity of prima and I m damn damn damn damn sure it vl give me huuuuuuge return….but for short term it vl test my conviction….pls understand what I m telling that if u give this ideas in market hours then ur genuine followers( like me) vl get the chance to buy at lower levels…god bless

  5. Sameer Anand says:

    The company has been there for so many years and still hasn’t been able to scale up. Would give it a a miss.

  6. Dear Ace what is your view about capital first for a long time.

  7. Sameer Anand says:

    Isn’t it illegal for companies to share price sensitive info with select people? I mean how do you get managements to open up with you? Really curious.

  8. Ram says:

    Dear Ace Investor,

    Ur comments on Marico kaya and Kiri Industries??

  9. mesh says:

    net profit margin is now 4.25 % vs 11.56 % going dn since 2011
    OPM also 11.95% vs 22.39 % going dn since 2011
    means products are sold as cheaper compared to 2011 ….(due to big players are also in this mkt)
    if we compare sales are increasing at 10% in last three years & both this marging are going dn very fast …..
    also total debt is increasing very fast in last 5 years nearly double to 28 cr vs 14 cr
    Return On Net Worth(%) also down 11.88 % vs 29.39 % in last 5 years.
    Return On Capital Employed(%) also down 15.60 % vs 29.39 % 5 years
    sir its not i confusing anyone but i am clarifying so that we can have a clean chat & produced a good outcome….
    your valuable view required

    • Debt increased for Capex. Also how many auto components companies you know that has 22% margins. Do you know how those margins were arrived at. Looks like you have just run a screener without bothering to read the annual reports. Also I hope you know how debt changes these ratios… I also like clean discussion but expect people to Atleast research the business and company

  10. mesh says:


  11. sangram says:

    I am holding mmfl from 200 levels. Would u suggest to shift half of the holdings to Simmonds Marshall Ltd

  12. mesh says:


  13. Aravind says:

    Dear Ace,

    Request your coveted and valuable views on the following stocks:

    1) Shree Hari Chemicals
    2) Bhageria Dye Chemicals
    3) Bodal Chemicals

    Thanks & regards

  14. Sanjay says:

    I was expecting it to come during market hours at least this time.

  15. Wolf says:

    I think this is an excellent choice. Thanks for your detailed analysis. I am going to enter this scrip at CMP as I am also bullish on auto ancillary. Do you have a view on PRICOL? It is in the same industry and has fallen sharply since making a lifetime high of 70. Currently it is 46. I am holding at 50 levels and wish to accumulate more. Would love to hear your opinion on this scrip. All the best.

  16. MyInsignia says:

    Hi Ace, Do you track archidply. Appears a good one.

  17. Dear Ace, thanks for reply but unfortunately i am not receiving any mail updates from the blog could you see i am blocked somehow

  18. shah says:

    What is your view on Foods & Inns and Somi conveyor beltings

  19. kamal2 says:

    How is Foods & Inns after the recent run up

  20. kmd says:

    Are u able to comment on enkei wheels…

  21. mayur says:

    Thanks for great story again…will definitely go on details n reports.

  22. Prashant C says:

    HI Ace.

    Your inputs on Stone India and Vidhi dye. Pls guide


    • yes both under research as i said earlier

      • Prashant C says:


        If you could suggest, which one to go for at this moment. I am really looking forward to consider one out of these two. Please assist me in the same.

        Vidhi is about to give the 1st dividend on 26th so as per my understanding there might be a fall after that. Sir, just wanna know which might be the better pick out of these two.

        Your guidance as always would help me in taking decision.


  23. pawan gupta says:

    Dear ace

    thanks for great picks

    can you Please update on sudharshan chemical
    it has fantastic results but going down.

  24. pp says:

    Ace whats you view on Ruby Mills?

  25. Altaf says:

    thanks !

  26. Jitendra says:

    Why to worry if invested for long term?
    These scrips are surely going to give massive profit in the long term.

    • Prashant says:

      True !!
      I dont see anything to worry about Prima and Cybertech… they will have their run soon .
      We need to have patience ..


      • sai says:

        CLOVER TECHNOLOGIES PRIVATE LIMITED sold 115000 shares of simmond today as per bse bulk deal on 24th nov 2014.CLOVE TECHNOLOGIES PRIVATE LIMITED as per bse data hold 15.13 percent that is 1694462 shares out of which only 1115000 is offloaded today.
        Pattern is very much similar to prima plastic where offloading was after 25% upmove but here it started just after 10%.
        No suggestions just blind and straight data of bse for your reference.

        • thats great then…it should improve liquidity just like it did for Aro Granite…. its normal for people to book profits….until and unless promotors are selling and exiting the stock in bulk, we need not worry….its a mere statistics…imagine what if it was rakesh jhunjhunwal was selling a company….should investors be worried…well if you are a trader you may but if you are an investor and you understand what you are buying, then you should not….case in point…Hawkins…we all know what happend once he sold….rest as they say is history…so dont get disturbed and “understand” what it means and if it affects the long term fundamentals…improving liquidity helps the funds get into the stock, which again fastens the re-rating… we all saw where is aro now….making new highs everyday..

        • also its worth noting that the deliver percentage is very high indicating the stocks were lapped up and still a lot of pending orders were there, so looks like the profit booking is done and we should see more action tomorrow..God Bless.

  27. Ganeshan Babu says:

    Dear Ace
    Thanks for the call but I am disappointed that once again you have posted a new stock during OFF market inspite of request from most followers and I am sure that this cannot be purchased by us anytime before the 80 levels.If calls are given during market hours everyone will have a fair chance as it takes time for conviction to set in and the stock will trade for sometime.
    At around 80 for Simmonds and 50 for Prima,I think I will rather build on my position in Prima further.

  28. sangram says:

    Hi ace today also cybertech going down. I didn’t find any bad news apart from ordinary quarterly result. Do u know any bad news. Today also I am buying it. Loving the fall until and unless there is anything bad happening in the business.

  29. Jitesh says:

    Dear Ace…i picked 2 companies basis your research in addition to mine but my losses in Cybertech is now crossing beyond 22% and in wanbury as well i am sitting on losses of about 10.6%….can we do bottom fishing or just wait n watch? i hope there is no change in fundamentals

  30. sammy says:

    Hi Ace….cupid has done a volume of 2000 with 50K sellers by now today!!Looks like nobody is interested!!!! Whats your view??

    • you are still not clear about my view on cupid 🙂

      • sammy says:

        I know what you feel about cupid but when convictions go north and indications go south..there are bound to be some reasons…right? So i’m just trying to figure that out…the reasons…..:-)

        • the stock which has given nearly 180% returns isbound to get correction. now you are trying to find probably unnatural reasons behind a 20% fall and loosing sleep (hopefully not) and people like me who are long term investors are least bothered as we are convinced about business… anyways, as they say ..More mouths will have more talks …so thats fine…people who are convinced only those should stay in business and others should not. I am totally convinced.

      • sammy says:

        Ok…Ace, i’m not loosing my sleep and nothing wrong with my understanding..corrections to some extent are good to maintain healthy pace of stock but my point is interest in the stock as there is no volume!! I mean imagine a sell order of 20K since morning didnt get executed!! To me volume talks about the interest in the stock…i’m not worried aabout the price till the times volumes are happening…pls correct me if i’m wrong here….

        • coming down on low volumes and going up on high volumes is all that matters (i.e. “executed” volumes)… see the last 3-6 months charts with candlestick and you will understand what it means…. 2% circuit is doing its bit…so impatient getting more impatient and trying to execute sell orders and that’s piling up 🙂 …one fine day somebody would come and pick up the entire chunk and then a new upmove would begin…lets see now….so far i do not see any wrong with the business….

  31. venkatesh says:

    Hi Ace,

    Query related to Manjushree delisting.
    As per SEBI guidlines floorprice is 378.49 and company has decide EXIT price of 455.
    So the investor will get 455 for sure or is there any ways by which company can give less then 455 in any circumstances.

    One more query: why company do go for delisting.. considering that they have good profit growth ahead or some other reason.

  32. shilpi says:


    what is ur view on Ahemadnagar forge in same segment. This is in EW3. CMP is 515, can boost upto 650 in a week or two. your view point.

  33. vandana says:

    Dear Ace!

    Please provide your view on Surana Telecom and Power.


  34. sam says:

    Hi ace….Does Basant agro looks interesting at cmp?

  35. nsriniv says:

    Dear Ace, I bought Simmonds good number of shares in the morning when it was open for a while. I have a question to ask you regarding Simmonds. Its a dividend paying company and its CAGR has been growing at 25% for the last 5 years. But why is it not reflected in the share price for the last five years. Its only in the last 12 months or so it has moved from 17 and odd level to 66 as on yesterday. Also in today’s CNBC TV I happened to hear from one of the experts that Auto ancilliary may not do well in the next few years as it has already reached saturation point. What’s your opinion on these two points. I want to hold my position for long term and hence this question.

    • its because last 5 yrs was bad for the industry and therefore, all the stocks were down and unnoticed (and not just this)… Second, auto sector is going to grow tremendeously, and therefore, it would have direct effect on auto dont agree with your comment of no growth or saturation….not applicable to simmonds…

  36. n p reddy says:

    Mr Ace, Please let me have your opinion to hold/sell of Jayushin, allotted in ipo. Thanks in advance….n p reddy.

  37. Chirag Shah says:

    Hi Ace, whats your view on diamond power infra? It looks like a strong company in right sector and off late making the right moves. Your views would help. Thanks

  38. Chirag Shah says:

    Hi Ace, would also want to know your views on Ganesha Ecosphere. Its a niche company with a sector that has the potential to boom and a proven business model. Views welcome

  39. Satheesh says:

    What happened to cybertech. It is slipping like anything… I would like to know what is cooking inside. Is it worth to hold??? Pls tell me sir.. I’m a small investor..

  40. nsriniv says:

    Dear Ace, Please reply to my clarifications. I am eagerly awaiting to see your comments

  41. indianbull10 says:

    Ace, are the contingent liabilities of V2Retail a concern?

  42. HK says:

    Your views on Ramkrishna Forgings?

  43. Bela says:

    Dipak Kanyalal shah sold 275000 shares of Prima Plastics on 14.11.2014…

  44. Any view on SPEL semiconductor pls.

  45. sam says:

    Hi Ace…your views on Surana Telecom and Power Ltd?

  46. rajul says:

    sir your expert view on shreyas shipping especially in the last quarter the fuel charges have come down {MENTIONED IN THE WORKING, from 19 percent of sales in the last quarter to 22 percent of sales in the corresponding quarter last year but it was only for 1 month they got benefit of lower diesel prices, but now in the coming quarter they will get the full benefit of lower diesel prices am i right on this point please answer

    • possible but better to ask the company itself

      • rajul says:

        sir thanks for the prompt reply .There are some additional information 1 in the annual report they have mentioned that the shreyas has got order from food corporation of india to transport 20000 tons of food from andhra pradesh to kerala per month2 the loss in q1 was due to loss in sale of ship (other wise there was profit) 3 The company received recently star award for best shipping company)4 the company reported rs 10 eps in the latest quarter since all the other shipping co are available at 18 p/e sir do you think it is a buy at this price of rs 154?

  47. Dear Ace,
    Even we like the business, i think there is appropriate price to enter it safely.Every price can not be safe. so I think its better to give some accumulation price range. this is just my view.

  48. kmd says:

    Ace i do nt think u able to.comment on himalaya int???

  49. Adarsa says:

    Dear ace,
    what your take on info edge at cmp

  50. ace investor – if u had 100 rs, how much wld u allocate to simmonds marshal,cybertech,v2 retail,cupid and prima plastics,..thnx..God bless

  51. nsriniv says:

    Dear Ace, please express your view on Tainwala Chemicals & Plastics. Is it looking good.

  52. Umesh says:

    Sir , your view on Federal-Mogul ( Also player in auto components )

  53. sai says:

    I wish this party will continue longer than prima.God bless.

  54. sangram says:

    There was disclosure of insider trading in cybertech. Mr. Rajesh goenka has acquired 5.32% through his various entities from 31/12/2013 to 26/09/14. What do you think of this.

  55. akshay says:

    Hi ace,

    Please provide your views on national fittings. Company seems to be doing good business for the past 3-4 qrts. Also delivered good q2 results. Please provide your views.

  56. Good night Brother. You have so much patience and so much interest in reading all these comments. Hats off..!

  57. Sameer Anand says:

    Yesterday one ofthe biggest entity holding shares in Simmonds sold off a large chunk:

    24/11/2014 507998 SIMMOND CLOVER TECHNOLOGIES PRIVATE LIMITED S 115,000 72.15

  58. sangram says:

    WordPress again in bad shape

  59. Ganesh says:

    hahahah… now when people have change to buy simmonds and that too at a cheaper price than yesterday , they are not buying it. And yesterday many people were saying that the stcok recommendations of ACE are useless because we cannot buy it before it goes up 30%….. People in stock markets have a psychololical problem…. they want to buy stocks which they cant buy and when that stock gives them chance to buy then they stay away from it or even sell it at loss if already bought…… hahahaha….. greeeeedddd all the way. God Bless…. once again hahahaha..

    • Ganesh says:

      spelling mistake “people have CHANCE to buy” not ” change”

    • thats why retail investors stay retail more often than not…similar things played out at freshtrop and even aro…for a possibility of buying 4-5% cheaper they give away chance of buying and forefeit 500% gains…thats sad

      • Akshit says:

        may be retailers have pulled back a little as cybertech and prima are falling continuously for past few day and that has scared them off.

      • Akshit says:

        I understand your point of view, but I heard from my father a lot of times, share market is not for every1 as not every1 can make money out of it

        • the reason it is not for everyone is because 1. they trade in the name of investment 2. they do not understand what they are buying and why… and therefore, invest on borrowd conviction which is shaken easily

      • Akshit says:

        very true bro…earlier I too got a bit scared but now i am just playing the game of “wait and watch”…..wish could buy some quantity of Simmmonds also but a little short on liquidity 😦

  60. ashok ojha says:

    what happen to simonds , yesterday buyers r out of market. is simonds to be going on cybertech way?

  61. sam says:

    Well….seems like nobody is talking about wanbury which is in upper circuit today after a looooong hiatus……??

  62. ashok ojha says:

    there was a bulk deals sold 115000 shares by clover tech. pvt. ltd having 15% holding.
    i think they start ofloading the same , thats why simonds price cracked

    • are bhai…if they had to offload so much as you are saying then when there were 2.75lacs buyers yesterday why didnt they sell? people like you try to overanalyze and loose out on good investing opportunities…same story and logic played in aro and same theory was floated by people with ulterior motives and what happened, aro made a new high after some time…good stocks dont stay down for long…rest its up to you … God Bless

  63. ashok ojha says:

    sorry, sir ,
    in thats way sharing of views one retailer developed hard conviction & get better as well as inovative ideas from R.A. thanks.

  64. muva0005 says:

    Hi sir,

    Your view on Rathi Steel & power ?

  65. Your penchant to recommend stocks with hardly 1 crore of quarterly profit is a sure recipe for disaster. You are doing the small investor a disservice by recommending such risky stocks. All small investors are in a “buy first, think later and regret” mode.
    When a company declares a mere 1 crore of profit, let us understand that the it is tottering between nirvana and calamity. Were a few things go wrong, the whole house will come falling down like a pack of cards (Case in point : cybertech).

    By the way, how can you even think of comparing symmonds with blue chip. of all people , you would know that the stock market valuation is also a function of not only systemic risk, but also company risk. Symmonds is a no name in the fastener segment. Do you think that it will ever command the valuation that a sundaram fastener commands ? Never.

    • Then dont buy, who’s forcing you. When i entered SKS, there were enough people saying SKS is a sure shot disaster and look at the valuations given by markets to SKS. What about hawkins? Do you know what was the case in 2004-05? Look at the valuations today… What about whirpool? anyways, i can go on. I am glad that there are people like you or we guys would never be able to buy stocks cheap and early. Its fine. Different views make a market and one should be investing according to their own investing style. God Bless !!

      • Aceinvestortrader

        When you post something on the internet, you have to be open for honest, critical comments. If you cannot do that, pls shut down your shop. Just as you have a right to post your recommendations, i have a right to post my thoughts on your recommendations. As long as both of us do it in a environment of civility and honesty, we should go on.

        My critical comments were only against your micro cap recommendations, with profits that hardly cross 1 crore per quarter. Thing can do bad very quickly with such companies. Moreover, one cannot look at blue chips and try to extrapolate the PE valuations to a micro cap. More than anyone else, you will know PE valuations are a function of many factors and not just EPS

  66. Joy says:


    I entered Simmonds Marshall 2015 Aug @ 95. Now it’s below 70. Can i average this. Is it a still good Buy at current levels? Please advise.

Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s