Showing posts with label Subros. Show all posts
Showing posts with label Subros. Show all posts
16 June 2012
07 February 2012
Buy Subros; Target :Rs 29 ::ICICI Securities (pdf link)
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B l e a k p e r f o r m a n c e ; o u t l o o k o p t i m i s t i c …
Subros Q3FY12 results were below our estimates. The top line came
slightly above our estimates at | 253.8 crore (I-direct estimate: | 247.7
crore) reflecting a decline of 7.1% YoY owing to ~13.0% YoY slide in
volumes. On a sequential basis, Subros posted a 9.3% volume growth
indicative of the gradually ramp up in production of its major client Maruti
coupled with strong performance of clients like Tata Motors and M&M.
However, the topline growth was restricted by realization fall of 3.4%
QoQ. The EBITDA margins came inline with our expectations at 8.6% (up
103bps YoY and 55bps QoQ) owing to benefits from component
localization strategy resulting in lesser dependence on Japanese imports.
The personnel costs came higher at |22.8 crore primarily due to
increased localization activities. The reported PAT for the quarter came in
at | 2.1 crore (down 62.5% YoY and 33.7% QoQ) owing to higher than
expected depreciation and interest costs.
ƒ Vendor hedging by Maruti expected to curtail forex impact
Maruti Suzuki has obtained special permission from the RBI to obtain
foreign exchange cover on behalf of its key suppliers like Subros. Maruti
procures ~90% of its component requirements locally, but many vendors
in turn import critical parts, mostly from Japan. For example,
compressors used by Subros in its air conditioning system are locally
assembled, but the piston used in it is imported from Japan. Currently,
Maruti compensates vendors for the forex losses incurred on the import
of component parts and thereby providing little incentive for localization.
But now, by hedging forex exposure and getting them to share the cost of
the cover, vendors are looking at localise sourcing more aggressively.
The benefits of the strategy are expected to flow from FY13E.
V a l u a t i o n
We expect margin expansion to continue as localisation strategy
mitigates input cost pressures. Moreover, we expect a rebound in the PV
segment in FY13E on a smaller base with key client Maruti expected to
post ~20% volume growth. At the CMP of | 26, the stock is trading at
9.6x FY12E EPS and 4.6x FY13E EPS. We have valued it at 5.0x FY13 EPS
of | 5.7 to arrive at a target price of | 29 implying a potential upside of
12%. We maintain our BUY rating on the stock
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B l e a k p e r f o r m a n c e ; o u t l o o k o p t i m i s t i c …
Subros Q3FY12 results were below our estimates. The top line came
slightly above our estimates at | 253.8 crore (I-direct estimate: | 247.7
crore) reflecting a decline of 7.1% YoY owing to ~13.0% YoY slide in
volumes. On a sequential basis, Subros posted a 9.3% volume growth
indicative of the gradually ramp up in production of its major client Maruti
coupled with strong performance of clients like Tata Motors and M&M.
However, the topline growth was restricted by realization fall of 3.4%
QoQ. The EBITDA margins came inline with our expectations at 8.6% (up
103bps YoY and 55bps QoQ) owing to benefits from component
localization strategy resulting in lesser dependence on Japanese imports.
The personnel costs came higher at |22.8 crore primarily due to
increased localization activities. The reported PAT for the quarter came in
at | 2.1 crore (down 62.5% YoY and 33.7% QoQ) owing to higher than
expected depreciation and interest costs.
ƒ Vendor hedging by Maruti expected to curtail forex impact
Maruti Suzuki has obtained special permission from the RBI to obtain
foreign exchange cover on behalf of its key suppliers like Subros. Maruti
procures ~90% of its component requirements locally, but many vendors
in turn import critical parts, mostly from Japan. For example,
compressors used by Subros in its air conditioning system are locally
assembled, but the piston used in it is imported from Japan. Currently,
Maruti compensates vendors for the forex losses incurred on the import
of component parts and thereby providing little incentive for localization.
But now, by hedging forex exposure and getting them to share the cost of
the cover, vendors are looking at localise sourcing more aggressively.
The benefits of the strategy are expected to flow from FY13E.
V a l u a t i o n
We expect margin expansion to continue as localisation strategy
mitigates input cost pressures. Moreover, we expect a rebound in the PV
segment in FY13E on a smaller base with key client Maruti expected to
post ~20% volume growth. At the CMP of | 26, the stock is trading at
9.6x FY12E EPS and 4.6x FY13E EPS. We have valued it at 5.0x FY13 EPS
of | 5.7 to arrive at a target price of | 29 implying a potential upside of
12%. We maintain our BUY rating on the stock
21 November 2011
Subros:: 2QFY2012 Result Update: Angel Broking,
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Subros reported poor performance for 2QFY2012 on account of lower volumes
and higher interest cost. The company’s volumes declined during the quarter, led
by slowdown in the domestic passenger vehicle industry. We have revised our
volume estimates downwards to factor in the sluggish demand scenario for
passenger vehicles in 2HFY2012 due to high interest rates and rising fuel prices.
We recommend a Neutral rating on the stock.
Performance impacted by lower volumes and higher interest expense: For
2QFY2012, net sales registered a 13.6% yoy (4.6% qoq) decline to `240.5cr,
largely due to the 24% yoy (9.8% qoq) decline in volumes. Volumes declined due
to general slowdown in the passenger car industry and slowdown in volumes of its
major clients, Maruti Suzuki and Tata Motors. Average net realization, however,
grew by 13.8% yoy (5.7% qoq), arresting the further top-line decline. Operating
margin witnessed an expansion of 116bp yoy to 7.9%, led by a 716bp yoy fall in
raw-material expenses. On the other hand, a 279bp and 322bp yoy increase in
other expenditure and staff cost restricted further yoy margin expansion.
Sequentially, operating margin contracted by 202bp yoy because of the sharp
increase in staff cost. Net profit registered a substantial decline of 35.9% yoy
(61% qoq) to `3.1cr mainly due to the 44.2% yoy increase in interest expense.
Outlook and valuation: We estimate Subros to register a decline in its volume in
FY2012E, led by slowdown in the passenger vehicle industry. Further, higher
interest expense on account of increasing debt levels will negatively affect the
company’s bottom line. At `27, the stock is trading at 8.2x FY2012E and 6.6x
FY2013E earnings. We recommend a Neutral rating on the stock.
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Subros reported poor performance for 2QFY2012 on account of lower volumes
and higher interest cost. The company’s volumes declined during the quarter, led
by slowdown in the domestic passenger vehicle industry. We have revised our
volume estimates downwards to factor in the sluggish demand scenario for
passenger vehicles in 2HFY2012 due to high interest rates and rising fuel prices.
We recommend a Neutral rating on the stock.
Performance impacted by lower volumes and higher interest expense: For
2QFY2012, net sales registered a 13.6% yoy (4.6% qoq) decline to `240.5cr,
largely due to the 24% yoy (9.8% qoq) decline in volumes. Volumes declined due
to general slowdown in the passenger car industry and slowdown in volumes of its
major clients, Maruti Suzuki and Tata Motors. Average net realization, however,
grew by 13.8% yoy (5.7% qoq), arresting the further top-line decline. Operating
margin witnessed an expansion of 116bp yoy to 7.9%, led by a 716bp yoy fall in
raw-material expenses. On the other hand, a 279bp and 322bp yoy increase in
other expenditure and staff cost restricted further yoy margin expansion.
Sequentially, operating margin contracted by 202bp yoy because of the sharp
increase in staff cost. Net profit registered a substantial decline of 35.9% yoy
(61% qoq) to `3.1cr mainly due to the 44.2% yoy increase in interest expense.
Outlook and valuation: We estimate Subros to register a decline in its volume in
FY2012E, led by slowdown in the passenger vehicle industry. Further, higher
interest expense on account of increasing debt levels will negatively affect the
company’s bottom line. At `27, the stock is trading at 8.2x FY2012E and 6.6x
FY2013E earnings. We recommend a Neutral rating on the stock.
07 November 2011
Buy Subros; Target : Rs 31 ::ICICI Securities,
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M u t e d p e r f o r m a n c e ; v a l u a t i o n s a t t r a c t i v e . . .
Subros reported its Q2FY12 numbers that were slightly below our
estimates. The topline came in line with our expectation at | 240.5 crore
(I-direct estimate: | 242.1 crore), a dip of 13.6% YoY owing to a decline in
volumes caused by production issues faced by its major client Maruti.
Thus volumes declined ~8% QoQ at ~1.8 lakh units however
realisations/unit improved ~4% QoQ to | 13,360 with richer product mix
towards truck & bus segment for Tata Motors and M&M. The company
has started to reap the benefits from the strategy of higher degree of
localisation of parts like RS evaporators and heater core thus providing an
incremental ~720 bps costs saving on YoY basis at 70.4%. EBITDA
margins however declined sequentially to 8.1% (down 217 bps QoQ) as
higher personnel costs (up 138 bps QoQ) as localisation activities
increased domestically. Margins also suffered due to forex impact which
would be provided by key clients with a quarterly lag. The reported PAT
for Q2FY12 came in at | 3.2 crore (down 34.4% YoY and 60.1% QoQ).
ƒ Localisation strategy to reduce forex exposure
The completion of total localisation of components like RS evaporators
and heater core during the quarter is expected to reduce the forex
exposure. The benefit from this is expected to flow through in the coming
quarters. The personnel expenses increased on this account (up 323 bps
YoY) as localisation led to higher salary expenses.
ƒ Key patron Maruti hit by labour unrest
Subros supplies ~73% of its sales to Maruti Suzuki, 16% towards Tata
Motors with M&M contributing ~8% of sales & ~3% from others. Maruti’s
volumes for Q2FY12 were sharply down ~20% YoY as the Manesar
labour unrest led to a loss of ~29,000 units. This resulted in higher
inventory, fixed costs leading to a EBITDA margin slide of ~100 bps QoQ
V a l u a t i o n
We expect the company’s localisation practices to further moderate input
prices and comprehend the current slowdown in domestic automotive
space as a near term phenomenon. At the CMP of | 27, the stock is
trading at 4.0x FY13E EPS. We have valued the stock at 4.5x FY13 EPS of
| 6.9 to arrive at a target price of | 31 with a potential upside of 15%.We
maintain our BUY rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
M u t e d p e r f o r m a n c e ; v a l u a t i o n s a t t r a c t i v e . . .
Subros reported its Q2FY12 numbers that were slightly below our
estimates. The topline came in line with our expectation at | 240.5 crore
(I-direct estimate: | 242.1 crore), a dip of 13.6% YoY owing to a decline in
volumes caused by production issues faced by its major client Maruti.
Thus volumes declined ~8% QoQ at ~1.8 lakh units however
realisations/unit improved ~4% QoQ to | 13,360 with richer product mix
towards truck & bus segment for Tata Motors and M&M. The company
has started to reap the benefits from the strategy of higher degree of
localisation of parts like RS evaporators and heater core thus providing an
incremental ~720 bps costs saving on YoY basis at 70.4%. EBITDA
margins however declined sequentially to 8.1% (down 217 bps QoQ) as
higher personnel costs (up 138 bps QoQ) as localisation activities
increased domestically. Margins also suffered due to forex impact which
would be provided by key clients with a quarterly lag. The reported PAT
for Q2FY12 came in at | 3.2 crore (down 34.4% YoY and 60.1% QoQ).
ƒ Localisation strategy to reduce forex exposure
The completion of total localisation of components like RS evaporators
and heater core during the quarter is expected to reduce the forex
exposure. The benefit from this is expected to flow through in the coming
quarters. The personnel expenses increased on this account (up 323 bps
YoY) as localisation led to higher salary expenses.
ƒ Key patron Maruti hit by labour unrest
Subros supplies ~73% of its sales to Maruti Suzuki, 16% towards Tata
Motors with M&M contributing ~8% of sales & ~3% from others. Maruti’s
volumes for Q2FY12 were sharply down ~20% YoY as the Manesar
labour unrest led to a loss of ~29,000 units. This resulted in higher
inventory, fixed costs leading to a EBITDA margin slide of ~100 bps QoQ
V a l u a t i o n
We expect the company’s localisation practices to further moderate input
prices and comprehend the current slowdown in domestic automotive
space as a near term phenomenon. At the CMP of | 27, the stock is
trading at 4.0x FY13E EPS. We have valued the stock at 4.5x FY13 EPS of
| 6.9 to arrive at a target price of | 31 with a potential upside of 15%.We
maintain our BUY rating on the stock.
09 August 2011
Buy Subros; Target : Rs 38:: ICICI Securities
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L o c a l i s a t i o n b e n e f i t s h e l p i n m a r g i n s r i s e …
Subros reported its Q1FY12 numbers that were above our estimates. The
topline came in line with our expectation at | 252.2 crore (I-direct
estimate: | 251.5 crore), a jump of 7.8% YoY due to volumes and
realisation improvement. On the raw material front, the company saw a
significant improvement (down 315 bps as a proportion to sales) owing to
complete localisation of parts like RS evaporators and heater core leading
to lower dependence on Japanese imports. EBITDA margins escalated to
10.3% (up 120 bps QoQ) with lower RM costs offsetting higher employee
expenses (up 85 bps YoY). The reported PAT was at | 8.0 crore (I-direct
estimate: | 6.6 crore). The company is availing tax benefits of MAT credit
entitlement accruing from higher R&D spending and paid only deferred
tax to the tune of | 1.6 crore in Q1FY12.
ƒ Margins perk up as complete localisation reduces forex exposure
The company witnessed margin expansion due to higher realisations on
an improving product mix. On the cost front, Subros was able to curtail its
costs with the help of complete localisation of components like RS
evaporators and heater core. It has led to a decline in forex exposure and
also has provided cost efficiencies. The personnel expenses have
increased on this account (up 85 bps YoY) as localisation would lead to
higher salary expense for the company. Subros supplies ~73% of its
sales to Maruti Suzuki, 16% towards Tata Motors, M&M contributing ~8%
of sales and ~3% from others. PV sales grew at 9.3% YoY for Q1FY12.
V a l u a t i o n
Going forward, input prices are expected to moderate further due to the
company’s localisation practices. However, sluggish growth in the
domestic automotive space remains a concern in the near term. At the
CMP of | 34, the stock is trading at 5.3x FY12E EPS of | 6.4 and 3.6x
FY13E EPS of | 9.4. We have valued it at 4.0x FY13 EPS of | 9.4 to arrive
at a target price of | 38. Our target price implies an upside of 12%. We are
recommending a BUY rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
L o c a l i s a t i o n b e n e f i t s h e l p i n m a r g i n s r i s e …
Subros reported its Q1FY12 numbers that were above our estimates. The
topline came in line with our expectation at | 252.2 crore (I-direct
estimate: | 251.5 crore), a jump of 7.8% YoY due to volumes and
realisation improvement. On the raw material front, the company saw a
significant improvement (down 315 bps as a proportion to sales) owing to
complete localisation of parts like RS evaporators and heater core leading
to lower dependence on Japanese imports. EBITDA margins escalated to
10.3% (up 120 bps QoQ) with lower RM costs offsetting higher employee
expenses (up 85 bps YoY). The reported PAT was at | 8.0 crore (I-direct
estimate: | 6.6 crore). The company is availing tax benefits of MAT credit
entitlement accruing from higher R&D spending and paid only deferred
tax to the tune of | 1.6 crore in Q1FY12.
ƒ Margins perk up as complete localisation reduces forex exposure
The company witnessed margin expansion due to higher realisations on
an improving product mix. On the cost front, Subros was able to curtail its
costs with the help of complete localisation of components like RS
evaporators and heater core. It has led to a decline in forex exposure and
also has provided cost efficiencies. The personnel expenses have
increased on this account (up 85 bps YoY) as localisation would lead to
higher salary expense for the company. Subros supplies ~73% of its
sales to Maruti Suzuki, 16% towards Tata Motors, M&M contributing ~8%
of sales and ~3% from others. PV sales grew at 9.3% YoY for Q1FY12.
V a l u a t i o n
Going forward, input prices are expected to moderate further due to the
company’s localisation practices. However, sluggish growth in the
domestic automotive space remains a concern in the near term. At the
CMP of | 34, the stock is trading at 5.3x FY12E EPS of | 6.4 and 3.6x
FY13E EPS of | 9.4. We have valued it at 4.0x FY13 EPS of | 9.4 to arrive
at a target price of | 38. Our target price implies an upside of 12%. We are
recommending a BUY rating on the stock.
08 May 2011
Subros:: Volume growth improves… ICICI Securities
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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.
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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.
09 February 2011
Reduce Subros: downgraded as Margins squeeze ahead… ICICI Securities
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Subros -Margins squeeze ahead…
Subros reported its Q3FY11 numbers below our estimates as topline
was at | 273.3 crore (I-direct estimate: | 297.2 crore), a decline of 1.8%
QoQ as volumes declined 4.6% QoQ. However, realisation improved 3%
as currency fluctuations eased in Q3FY11 and helped shore up declines.
Input costs saw a decline of ~220 bps QoQ mainly due to the lag effect
support of OEMs (Maruti Suzuki) in Q2FY11 and increased forex impact.
EBITDA margins improved to 7.6% (up 70 bps QoQ) though it could
have been much higher if employee expenses had not seen a 70 bps
hike sequentially. The reported PAT was at | 5.5 crore (I-direct estimate:
| 9.1 crore). It was mainly pushed further down due to higher tax outgo
for Q3FY11 along with weaker operating metrics.
India Equity Research Reports, IPO and Stock News
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Subros -Margins squeeze ahead…
Subros reported its Q3FY11 numbers below our estimates as topline
was at | 273.3 crore (I-direct estimate: | 297.2 crore), a decline of 1.8%
QoQ as volumes declined 4.6% QoQ. However, realisation improved 3%
as currency fluctuations eased in Q3FY11 and helped shore up declines.
Input costs saw a decline of ~220 bps QoQ mainly due to the lag effect
support of OEMs (Maruti Suzuki) in Q2FY11 and increased forex impact.
EBITDA margins improved to 7.6% (up 70 bps QoQ) though it could
have been much higher if employee expenses had not seen a 70 bps
hike sequentially. The reported PAT was at | 5.5 crore (I-direct estimate:
| 9.1 crore). It was mainly pushed further down due to higher tax outgo
for Q3FY11 along with weaker operating metrics.
07 February 2011
Subros – 3QFY2011 Result Update - Angel Broking
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Subros – 3QFY2011 Result Update
For 3QFY2011, Subros reported a weak performance on the bottom-line front,
despite healthy volume and top-line performance. Operating performance was
subdued during the quarter due to the substantial increase in raw-material cost
leading to a significant contraction in margins. We revise our earnings estimates
downwards to account for raw-material cost pressures and recommend Neutral
on the stock.
India Equity Research Reports, IPO and Stock News
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Subros – 3QFY2011 Result Update
Angel Broking recommends a Neutral on Subros.
despite healthy volume and top-line performance. Operating performance was
subdued during the quarter due to the substantial increase in raw-material cost
leading to a significant contraction in margins. We revise our earnings estimates
downwards to account for raw-material cost pressures and recommend Neutral
on the stock.
10 November 2010
Subros: Rides the demand wave: ICICI Sec
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Rides the demand wave…
Subros reported a mixed set of Q2FY11 numbers as it beat our topline
estimates at Rs 278.2 crore (I-direct estimate: Rs 250.7 crore) seeing
volume driven growth of 19.3% QoQ and 30% YoY to 2.3 lakh units. In
contrast, blended realisations remained flat in H1FY11 due to
unfavourable currency movements. On the costs front, higher content of
imported components have led to input costs rising 370 bps as the yen
has appreciated ~14% in H1FY11, thereby, also leading to a sequential
decline of 230 bps. Reported PAT was at Rs 4.9 crore on the back of
lower tax accounting due to tax exemptions received for research and
development (R&D) activities and other deferred tax benefits.
07 November 2010
Subros – 2QFY2011 Result Update- Angel Broking
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Subros – 2QFY2011 Result Update
Angel Broking maintains a Buy on Subros with a Target Price of Rs57.
For 2QFY2011, Subros reported subdued performance on the bottom-line front,
despite healthy volume growth. Average net realisation registered a marginal
decline yoy. Net profit declined substantially due to contraction in operating
margin. However, owing to better growth visibility in the segment and reasonable
valuations, we maintain a Buy on the stock.
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