Its pretty interesting that during the couple of days that I bought this stock and writing this review, the stock actually has gone up by almost 30%.
Current market cap of the company stands at Rs. 887 crores with total assets of Rs. 13,203 crores. While the company is actually making a Pre-Interest Payment profit every quarter (Rs. 176 crores in the Dec'15 quarter), the financing/interest cost has turned the company cash flow negative. The company used too much leverage for acquiring overseas Auto Ancillary companies at higher valuations and now the Total Debt of the company stands at Rs. 8115 Crores.
The only way out for Amtek Auto from here is to sell off some of it's subsidiaries. Assuming that the company manages to sell atleast $1 billion of it's subsidiaries at asset value price, the company may be worth around Rs. 4000 crores. This would bounce the stock back to minimum 70-80 levels.
This is an enterprising investment and includes considerable risk. We are not aware of the time frame the company may take to sell off some of its subsidiaries. The company has engaged Morgan Stanley to advise them on Debt reduction in early 2016. However, it may take more than a year to realize debt reduction through sales of subsidiaries.
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