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Automotive Axles – 1QSY2011
Automotive Axles (AAL) posted a strong set of results for 1QSY2011, with the top line and
bottom line largely in line with our estimates. AAL registered 32% yoy and 7.5% qoq growth
in net sales to `179.5cr (`95cr), against our estimates of `175cr. While domestic sales grew
by 29.9% yoy, export revenue increased by 70.9% yoy during 1QSY2011. On the operating
front, AAL registered a 50bp yoy and 67bp qoq expansion in EBITDA margins to 12.4%
(11.9%) against our estimates of 12%. The improvement in margins was on account of a
144bp yoy and 35bp yoy decrease in raw-material and staff cost, respectively. Raw-material
cost accounted for 71% (72.4%) of sales during the quarter. The increase in other
expenditure by 130bp, however, arrested the further expansion in margins. Net profit during
the quarter stood at `9.8cr (`6.4cr), against our estimates of `9.9cr, posting 51.6% yoy
growth. We expect recovery in the commercial vehicle segment to help the company report
better performance going ahead. We maintain our Buy rating on the stock with a revised
Target Price of `490 (`525), at which level the stock would trade at 14x SY2012E earnings
(in line with its historical valuation).
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Automotive Axles – 1QSY2011
Automotive Axles (AAL) posted a strong set of results for 1QSY2011, with the top line and
bottom line largely in line with our estimates. AAL registered 32% yoy and 7.5% qoq growth
in net sales to `179.5cr (`95cr), against our estimates of `175cr. While domestic sales grew
by 29.9% yoy, export revenue increased by 70.9% yoy during 1QSY2011. On the operating
front, AAL registered a 50bp yoy and 67bp qoq expansion in EBITDA margins to 12.4%
(11.9%) against our estimates of 12%. The improvement in margins was on account of a
144bp yoy and 35bp yoy decrease in raw-material and staff cost, respectively. Raw-material
cost accounted for 71% (72.4%) of sales during the quarter. The increase in other
expenditure by 130bp, however, arrested the further expansion in margins. Net profit during
the quarter stood at `9.8cr (`6.4cr), against our estimates of `9.9cr, posting 51.6% yoy
growth. We expect recovery in the commercial vehicle segment to help the company report
better performance going ahead. We maintain our Buy rating on the stock with a revised
Target Price of `490 (`525), at which level the stock would trade at 14x SY2012E earnings
(in line with its historical valuation).
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