Result Update: Talbros Automotive Ltd - BUY - TP Rs.400 - Kotak

TBA reported robust growth in revenue, EBITDA and net profit. Volume growth coupled with new order execution translated into strong growth for the company. Overall results came in ahead of our estimates.

Key Highlights

Consolidated revenue for the company grew by 27% YoY, to Rs1,283mn. Despite input cost pressure, the company reported YoY and QoQ improvement in EBITDA margin. Led by 49% increase in EBITDA, TBA reported 60% YoY growth in adjusted net profit. Consolidated revenue only includes standalone gasket and forging revenue; as for joint venture, under IndAS, the net profit is taken in share of profit from JV/associates.

Outlook and Valuation

Company's revenue growth looks strong with contribution from all businesses/joint ventures. In the gasket business, increasing auto sales coupled with BSVI is expected to drive revenue. In the forging business and Marelli Talbros Chassis Systems (MMT) JV, various order wins is expected to translate into high revenue growth. EBITDA margin is expected to improve on the back of cost control measures and operating leverage benefits. At the CMP, the stock is available at a PE of 8.3x on FY20E earnings. We maintain BUY rating on the stock with revised price target of Rs400 (earlier Rs396)

Shares of TALBROS AUTOMOTIVE COMPONENTS LTD. was last trading in BSE at Rs.236.15 as compared to the previous close of Rs. 231.8. The total number of shares traded during the day was 4598 in over 33 trades.

The stock hit an intraday high of Rs. 239.5 and intraday low of 230. The net turnover during the day was Rs. 1064219.

Source : Equity Bulls

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