Force Motors - 2QFY2014 Result Review - Angel Broking

Force Motors (FML) reported mixed set of numbers for 2QFY2014. Top-line for the quarter came in 6.4% lower to Rs. 472cr, vis-à-vis our estimate of Rs. 498cr. On operating front, EBITDA plunged by 36.2% yoy to Rs. 20cr, better than our expectation of Rs. 12cr. Other expenses increased by 19.8% yoy thereby eroding the EBITDA margins by 195 bp yoy to 4.2%. Amidst poor operating performance, tax outgo for the company which was negative at Rs. 23.4cr lead to 40.5% yoy growth in the net profit of the company to Rs. 26.9cr. Due to prevailing slowdown in the economy coupled with the consistent under performance of the company we have revised our earnings estimates downwards.

We recommend Accumulate on the stock with the revised target price of Rs. 349, based on target PE of 9x for FY2015E.

Source : Equity Bulls

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