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Volume growth improves…
Subros reported its Q4FY11 numbers above our estimates as the topline
was at | 303.7 crore (I-direct estimate: | 286.4 crore), a jump of 11.1%
QoQ as volumes grew 9.7% QoQ and realisation improved 1.3%. Input
costs saw a decline of ~80 bps QoQ with increasing degree of
localisation in case of parts like evaporators leading to lower dependence
on Japanese imports. EBITDA margins improved to 9.1% (up 150 bps
QoQ) with lower RM costs and lower employee expenses (lower 110 bps)
as contract employees saw a reduction. The reported PAT was at | 10.9
crore (I-direct estimate: | 6.5 crore). It was mainly pushed higher by lower
tax outgo for Q4FY11 with tax benefits accruing from higher R&D
spending in FY11.
Volume growth continues as OEM demand grows…
Subros continues to enjoy 40% market share. It caters to ~55% of Maruti
Suzuki demand and ~52% of Tata Motors PV demand. PV demand for
FY11 has remained robust through the year and ended at ~24% for
FY11.Subros continues to supply ~70% of its sales to Maruti Suzuki and
16% towards Tata Motors with M&M contributing ~8-9% of sales.
Margins improve as higher localisation reduces forex exposure
The company has witnessed an improvement in margins due to higher
realisations on an improving product mix. On the cost front, Subros was
able to rationalise costs with the help of increasing localisation on
components like evaporators, which has led to a decline in forex
exposure and has also provided cost efficiencies. The margins improved
as employee expenses reduced due to a decline of temporary hiring.
Valuation
Domestic automotive demand continues to remain strong with volume
expansion in progress. However, higher input prices remain a concern in
the medium term. At the CMP of | 34, the stock is trading at 8.6x FY12E
EPS of | 4.0 and 4.9x FY13E EPS of | 6.9. We have valued it at 5.0x FY13E
EPS of | 6.9 to arrive at a target price of | 36. Our target price implies an
upside of 6%. We have maintained our HOLD rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Volume growth improves…
Subros reported its Q4FY11 numbers above our estimates as the topline
was at | 303.7 crore (I-direct estimate: | 286.4 crore), a jump of 11.1%
QoQ as volumes grew 9.7% QoQ and realisation improved 1.3%. Input
costs saw a decline of ~80 bps QoQ with increasing degree of
localisation in case of parts like evaporators leading to lower dependence
on Japanese imports. EBITDA margins improved to 9.1% (up 150 bps
QoQ) with lower RM costs and lower employee expenses (lower 110 bps)
as contract employees saw a reduction. The reported PAT was at | 10.9
crore (I-direct estimate: | 6.5 crore). It was mainly pushed higher by lower
tax outgo for Q4FY11 with tax benefits accruing from higher R&D
spending in FY11.
Volume growth continues as OEM demand grows…
Subros continues to enjoy 40% market share. It caters to ~55% of Maruti
Suzuki demand and ~52% of Tata Motors PV demand. PV demand for
FY11 has remained robust through the year and ended at ~24% for
FY11.Subros continues to supply ~70% of its sales to Maruti Suzuki and
16% towards Tata Motors with M&M contributing ~8-9% of sales.
Margins improve as higher localisation reduces forex exposure
The company has witnessed an improvement in margins due to higher
realisations on an improving product mix. On the cost front, Subros was
able to rationalise costs with the help of increasing localisation on
components like evaporators, which has led to a decline in forex
exposure and has also provided cost efficiencies. The margins improved
as employee expenses reduced due to a decline of temporary hiring.
Valuation
Domestic automotive demand continues to remain strong with volume
expansion in progress. However, higher input prices remain a concern in
the medium term. At the CMP of | 34, the stock is trading at 8.6x FY12E
EPS of | 4.0 and 4.9x FY13E EPS of | 6.9. We have valued it at 5.0x FY13E
EPS of | 6.9 to arrive at a target price of | 36. Our target price implies an
upside of 6%. We have maintained our HOLD rating on the stock.
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