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F r a i l o p e r a t i n g p e r f o r m a n c e ! ! !
Automotive Axle (AAL) reported a disappointing set of numbers for
Q4SY11. The topline came in line with our expectations at | 273.9 crore
(I-direct estimate: | 267.7 crore) reflecting a 2.6% QoQ growth. The
revenues were driven by robust sales to the tune of | 46.98 crore from
the recently purchased brake manufacturing facilities from Kalyani
Global Engineering Pvt Ltd. However, the company witnessed a
lacklustre performance on the EBITDA margin front with margins sliding
to their lowest levels since Q1SY09. The raw material as a proportion of
sales jumped ~480 bps QoQ to 74.9% as input costs continued to
remain at elevated levels. The company reported a PAT of | 11.7 crore
(I-direct estimate: | 17.4 crore), indicating a fall of 34.3% QoQ.
ƒ Key highlights of the quarter
The domestic M&HCV segment grew by a robust 14.0% in Q4SY11. The
key players in the segment like Tata Motors and Ashok Leyland registered
sequential volume growth in the M&HCV category of 10.6% and 22.3%,
respectively. The company currently caters to ~10% and ~70% of the
respective requirements in terms of axle housings. AAL’s recently
purchased brake manufacturing facilities at Mysore from Kalyani Global
Engineering posted steady growth of ~4% QoQ at | 46.98 crore. The
exports business continued its northward trajectory with sales of | 20.38
crore, a jump of 20.61% QoQ. However, margin maintenance remains a
major concern in the near term with commodity prices continuing to
remain an overhang.
V a l u a t i o n
The domestic commercial vehicle space sustained its positive volume
growth in Q4SY11 (up ~15% QoQ). We maintain our optimistic stance on
volume offtake in H2FY12 as the interest rate cycle peaks out. We remain
upbeat on AAL’s business though headwinds like high input costs and
interest rates exist in near term. At the CMP of | 354, the stock is trading
at 8.1x SY12E EPS of | 43.5 and 6.2x SY13E EPS of | 57.1. We have
valued the business at 7x SY13E EPS of | 57.1 to arrive at target price of
| 400 implying a 3% upside. We maintain our BUY rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
F r a i l o p e r a t i n g p e r f o r m a n c e ! ! !
Automotive Axle (AAL) reported a disappointing set of numbers for
Q4SY11. The topline came in line with our expectations at | 273.9 crore
(I-direct estimate: | 267.7 crore) reflecting a 2.6% QoQ growth. The
revenues were driven by robust sales to the tune of | 46.98 crore from
the recently purchased brake manufacturing facilities from Kalyani
Global Engineering Pvt Ltd. However, the company witnessed a
lacklustre performance on the EBITDA margin front with margins sliding
to their lowest levels since Q1SY09. The raw material as a proportion of
sales jumped ~480 bps QoQ to 74.9% as input costs continued to
remain at elevated levels. The company reported a PAT of | 11.7 crore
(I-direct estimate: | 17.4 crore), indicating a fall of 34.3% QoQ.
ƒ Key highlights of the quarter
The domestic M&HCV segment grew by a robust 14.0% in Q4SY11. The
key players in the segment like Tata Motors and Ashok Leyland registered
sequential volume growth in the M&HCV category of 10.6% and 22.3%,
respectively. The company currently caters to ~10% and ~70% of the
respective requirements in terms of axle housings. AAL’s recently
purchased brake manufacturing facilities at Mysore from Kalyani Global
Engineering posted steady growth of ~4% QoQ at | 46.98 crore. The
exports business continued its northward trajectory with sales of | 20.38
crore, a jump of 20.61% QoQ. However, margin maintenance remains a
major concern in the near term with commodity prices continuing to
remain an overhang.
V a l u a t i o n
The domestic commercial vehicle space sustained its positive volume
growth in Q4SY11 (up ~15% QoQ). We maintain our optimistic stance on
volume offtake in H2FY12 as the interest rate cycle peaks out. We remain
upbeat on AAL’s business though headwinds like high input costs and
interest rates exist in near term. At the CMP of | 354, the stock is trading
at 8.1x SY12E EPS of | 43.5 and 6.2x SY13E EPS of | 57.1. We have
valued the business at 7x SY13E EPS of | 57.1 to arrive at target price of
| 400 implying a 3% upside. We maintain our BUY rating on the stock.
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