Today I began with another small-cap stock, Alicon Castalloy.
"Alicon Castalloy is one of the largest integrated aluminium casting manufacturing units in India offering end-to-end solutions across the entire value chain, and delivering best-in- class aluminium castings - Gravity, Low Pressure and Sand Casting."
The valuations of the company look over-beaten. The per-share book value is Rs.86 and the stock quotes at Rs.50. The company has a market capitalization of Rs.53 crores; the net-profit in FY13 was 16.87 crores (i.e. the PE of 3.15 times). The cash-flows are decent, and the company has been consistently paying out dividends (with the current yield of 3%).
The company has a high debt, but CRISIL has given a stable A- rating.
The primary concerns seem to be the decreasing margins from 20% levels in early 2000s to current 10% levels. The overseas subsidiaries have been burning cash, though recent quarters look better. Going forward, there are reports which talk about upcoming expansions. Another increase in debt can impact the bottom-line negatively.
Overall, the prospects of the company largely depend on better margins and growth. Current valuations seem to have already discounted much of the risks, and it looks interesting to me at these levels.