Force Motors - 1QFY2014 Result Review - Angel Broking

Force Motors (FML) reported decent set of numbers for 1QFY2014. Top-line for the quarter came in flat at Rs. 504cr vis-à-vis our estimate of Rs. 590cr. On operating front, EBITDA surged by 89% yoy (after consistent poor performance since last two quarters) to Rs. 33cr while margins expanded by 305bp yoy to 6.5% from 3.4% in the same quarter previous year. Margin expansion was largely due to reduced raw material cost as percentage of sales (by 6.5%) which was partially offset by increased other expenses (by 9.5%). On the back of robust operating performance, net profit reported growth of 38.3% yoy to Rs. 14.3cr with margins at 2.8% (2.0% in 1QFY2013). After the correction in the stock on account of poor results since last two quarters, the stock is trading at cheap valuation of 5.7x PE for FY2015E.

We maintain our Buy recommendation on the stock with revised target price of Rs. 349, based on target PE of 8x for FY2015E.

Source : Equity Bulls

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