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India Equity Research Reports, IPO and Stock News
India Equity Research Reports, IPO and Stock News
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TP : Rs1,700
Investment Rationale
§ CV volumes to surprise positively driven by higher demand for 7.5-12ton segment during slowdown (~65% of
EML’s portfolio) and its success in 12- 16ton segment (aided by support from Volvo)
§ Two wheeler demand remains strong and enjoys strong brand equity. Higher capacity coming on stream and
clear focus on the business will lead to strong volumes and improved margins
§ Engine outsourcing business to commence from CY13 onwards and provides a strong potential. Capacity
planned is of 85,000 units for engines of Euro II to Euro VI.
Valuations
§ We have valued the existing business (two wheeler at 8x and CV at 7x CY12 EV/EBITDA) at Rs 1,547
§ We value the engine outsourcing business at Rs 153
§ The key trigger for the stock will be strong monthly volumes and quarterly earnings
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