Eicher Motors (EICMOT)images.moneycontrol.com/static-mcnews/2020/06/Eicher-Motors-15… · | Eicher...

ICIC

I S

ecurit

ies –

Retail E

quit

y R

esearch

Result

Update

June 13, 2020

CMP: | 16,860 Target: | 18,070 (7%) Target Period: 12 months

Eicher Motors (EICMOT)

HOLD

Muted margins, valuation steadily inching near mean

Eicher Motors (EIL) reported a muted Q4FY20 performance. Consolidated

revenues were at | 2,208 crore (down 12% YoY), with ASPs for Royal Enfield

(RE) at | 1.33 lakh/unit (up 3.5% QoQ) while sales volumes were at 1.6 lakh

units, down 17% YoY. EBITDA margins were at 19.6% (down 540 bps QoQ),

with subdued performance attributable to increase in all overhead costs as

proportion of sales. Consequent consolidated PAT was at | 304 crore, down

44% YoY. The company’s board of directors approved sub-division of equity

shares from face value of | 10 to | 1 i.e. split in the ratio of 1:10, subject to

approval in the ensuing AGM.

Brand RE undiminished; currently leads 2-W recovery

EIL’s RE franchise is undisputed market leader in >250 cc category with 96%

domestic market share as of FY20. Its brand loyalty, aspirational pull have

only gained strength in past decade (CY10-FY20 domestic volume CAGR

31.6%). We expect mass market/commuter motorcycle segment to be

among frontrunners of post Covid volume revival due to better income

stability in traditional user areas (rural, semi urban geographies), evolving

preference for personal mobility to serve social distancing needs.

Discretionary spend on higher ticket price items is likely to slow down in

current environment. However, EIL’s average daily retail sales in June, thus

far, are at ~43% of pre Covid levels, putting it ahead of other major domestic

2-W peers. A supportive factor for EIL may be its healthy exposure to states

with relatively higher per capita income (46% of 9MFY20 volumes from

Kerala, Maharashtra, Tamil Nadu, Punjab, Delhi, Karnataka, Haryana).

Nevertheless, we build in 20% volume fall in FY21E before 23% growth in

FY22E, with implied CAGR in FY20-22E at -1%.

Long road to margin recovery

The company’s current margin profile, while healthy, is far removed from

FY17-19 highs (~30%). Q4FY20 EBITDA margins were at a new low of 19.6%

that even post adjusting for one-offs were at ~22%. Expected volume

sluggishness in FY20P-22E is seen limiting operating leverage benefits,

further elongating the wait for a climb back towards earlier trajectory.

Moreover, persistent weakness in CV space is set to weigh on net

profitability (EIL has 54.4% stake in VECV). Continued improvement in

traction for exports, increasing share of >350 cc products and benign

general commodity prices, however, could act as a small tailwind in times

to come. We build 21.6%, 23.8% margins in FY21E & FY22E, respectively.

Valuation & Outlook

For EIL, we factor in 3.7%, 1.5% sales, PAT CAGR in FY20P-22E. We like EIL

for its dominant market position, robust financials i.e. net cash positive B/S

(~| 6,800 crore), double digit return ratios (~20% RoCE). Still, recent stock

price run up, limits upside, going ahead. Hence, we downgrade EIL from

BUY to HOLD valuing on SOTP basis at | 18,070 (26 P/E to RE; 15 P/E to

VECV on FY22E).

K ey F in an cials F Y18 F Y19 F Y20P F Y21E F Y22E C AG R (F Y20P -22E )

Net S a les 8,965.0 9,797.1 9,153.6 7,925.3 9,852.8 3.7%

E B ITD A 2,807.6 2,903.1 2,180.3 1,711.1 2,341.2 3.6%

E B ITD A Margins (% ) 31.3 29.6 23.8 21.6 23.8

Net P rofit 1,959.7 2,202.8 1,827.5 1,350.6 1,883.5 1.5%

E P S (₹) 718.9 808.1 670.4 495.4 690.9

P /E 23.5 20.9 25.1 34.0 24.4

R oNW (% ) 29.9 24.8 18.3 12.2 14.9

R oC E (% ) 39.1 32.5 22.5 15.9 19.1

Key Financial Summary

Source: ICICI Direct Research, Company

Particulars

Price chart

Key Highlights

Muted performance in Q4FY20. RE

volumes for quarter were down

17% YoY to 1.6 lakh units. ASPs,

however, improved 6% YoY to

| 1.33lakh/unit. Consequent topline

decline limited to 12% YoY

Margins at new low of 19.6% with

increase in all overhead costs

Studio format stores count ries to

600+ as of FY20 end with EIL aiming

to add similar number in FY21E

Recent stock price run-up leaves

limited upside potential.

Downgrade from BUY to HOLD with

revised TP of | 18,070 using SOTP

valuation methodology

Research Analyst

Shashank Kanodia, CFA

[email protected]

Jaimin Desai

[email protected]

P articu lar ₹ cro re

Marke t C apita liza tion 45,960

Tota l D ebt (F Y20P ) 171

C ash & Investments (F Y20P ) 6,807

E V (F Y20P ) (₹ crore ) 39,324

52 week H /L (₹) 23,428 / 12,460

E quity capita l ₹ 27.3 C rore

F ace va lue ₹ 10

0

5,000

10,000

15,000

10000140001800022000260003000034000

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Eicher Motors (LHS) Nifty (RHS)

ICICI Securities | Retail Research 2

ICICI Direct Research

Result Update | Eicher Motors

Exhibit 1: Variance Analysis

Source: Company, ICICI Direct Research

Exhibit 2: Change in estimates


Exhibit 3: Assumptions


Q4FY20 Q4FY20E Q4FY19 YoY (%) Q3FY20 QoQ (%) Comments

Total Operating Income 2208 2147 2500 -11.7 2371 -6.9Topline came in marginally ahead of estimates tracking

beat on ASP's

Raw Material Expenses 1176 1143 1282 -8.3 1242 -5.3

RM costs came in higher by 190 bps QoQ on account

of higher share of BS-VI variant dispatches and cost

pass through led increase in pricing of BS-VI variants

Purchase of traded goods 68 43 53 27.8 48 40.4

Employee Expenses 214 171 171 25.1 185 15.7Employee costs for the quarter came in substantially

higher and was by 190 bps QoQ

Other expenses 319 275 310 2.9 304 4.7

EBITDA 432 515 685 -36.9 592 -27.0

EBITDA Margin (%) 19.6 24.0 27.4 -781 bps 25.0 -540 bpsEBITDA margins came in at a new low of 19.6%

tracking increase in all overhead costs as a % of sales

Other Income 143 115 143 0.3 135 6.3

Depreciation 109 94 81 34.2 95 14.4

Interest 6 1 2 158.4 4 29.8

Total Tax 142 135 275 -48.1 145 -2.0 Tax rate for the quarter came in higher at 31%

PAT 304 411 545 -44.1 499 -38.9

Key Metrics

Royal Enfield ASP(₹) 132,864 130,884 125,366 6.0 128,318 3.5

ASPs for RE came in higher at ₹ 1.33 lakh/unit tracking

increasing share of BS-VI variant dispatches in overall

product mix

VECV ASP (₹ lakhs) 18.1 16.3 15.3 18.4 17.1 5.5

Comments

(₹ Crore) Old New % Change Old New % Change

Revenue 7,816 7,925 1.4 9,700 9,853 1.6

Broadly maintain topline estimates for FY21-22E. We

expect EIL to clock Sales CAGR of 3.7% over FY20-22E,

largely led by BS-VI led increase in ASPs with volume

CAGR at -1% in the same period

EBITDA 1,779 1,711 -3.8 2,414 2,341 -3.0

EBITDA Margin (%) 22.8 21.6 -118 bps 24.9 23.8 -112 bps

Lower than anticipated operating margins in Q4FY20 amid

disproportionate increase in employee costs leads us to

downward revise our margin estimates for FY21-22E

PAT 1,454 1,351 -7.1 1,969 1,883 -4.3

EPS (₹) 533 495 -7.1 722 691 -4.3

Downward revision in margin estimates leads to downward

revision for EPS estimates for FY21-22E (4%-7%). We

expect EIL to clock PAT CAGR of 1.5% over FY20-22E

FY21E FY22E

Comments

FY18 FY19 FY20P FY21E FY22E FY21E FY22E

Royal Enfield

volumes

820,121 826,098 695,839 556,342 681,827 557,558 682,108

Broadly maintain volume estimates for RE.

We build in 20% volume decline in FY21E

before 23% growth in FY22E, with implied

CAGR over FY20-22E at -1%

Royal Enfield

ASP/unit (|)

111,785 117,603 129,465 141,323 143,360 139,210 141,218

VECV volumes 66,233 72,860 48,786 38,930 48,866 39,156 46,856

For CV volumes at VECV, we build in 20%

volume decline for FY21E and 25% volume

growth in FY22E with implied CAGR flat over

FY20-22E

EarlierCurrent




Conference Call Highlights

Demand, management outlook and guidance

EIL’s bookings have reached near pre-Covid levels. North and south regions are

better placed than others while Western India is a laggard at the moment

The company is currently operating at ~40% capacity utilisation levels.

Total ~90% of company’s dealership are now open

Supply chain at EIL is not fully secured yet

BS-VI models formed >60% of Q4FY20 retail sales.

Revenues, costs and margins

Q4FY20 profitability was impacted by one offs worth ~| 50 crore (~200-250 bps)

from provision made for certain brake calliper related recalls and currency volatility

related to Latin American markets

During Q4FY20, VECV clocked revenues of | 2,101 crore, with EBITDA at | 38 crore

(down 86% YoY) and ensuing PAT amounting to a loss of | 26 crore. For full year

FY20, net sales amounted to | 8,504 while EBITDA came in at | 409 crore (down

59% YoY). FY20 PAT stood at | 58 crore (down 88% YoY). CV demand recovery is

expected to delayed

EIL undertook a price hike of ~| 3,000/unit in April (at retail level). The company

has largely passed on BS-VI costs and costs + margins in some cases

Employee costs for the quarter came in higher at | 214 crore (up 25% YoY) on

account of ESOP costs attribution among others and is had no exceptional items.

On absolute count, total number of employees is on a decline at EIL

Others

EIL opened 100 studio stores in Q4FY20, taking the total count to over 600. The

company informed that studio store set up costs is 1/10th of large format stores. It

plans to add a similar number of studio stores (~600) in FY21E

Total large format stores in India as of FY20 end stood at 921, wherein company

added 6 stores in FY20

The company added 10 exclusive stores outside India during the quarter, with total

count now at 77. It is now present in 21 countries through these 77 stores as of

FY20 vs. presence in 18 countries with 42 stores as of FY19

Company has no unsold BS-IV inventory

FY21E capex outgo would be on broadly similar lines to FY20 (~| 500 crore),

however largely on product development side

First time and replacement buyers form ~10% and 5% of RE customers, with

predominant demand being upgrades in nature; the customers essentially looking

for more than just mobility

EIL plans to launch one new model every quarter

EIL as a strategy will remain in the mid-size premium bike category over next five to seven years




Financial story in charts

Exhibit 4: Royal Enfield growth trajectory


Exhibit 5: VECV volumes


Exhibit 6: Return ratio profile


7,033

8,965

9,797 9,154

7,925

9,853 30.9

31.3

29.6 23.8

21.6 23.8

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

-

2,000

4,000

6,000

8,000

10,000

12,000

FY17 FY18 FY19 FY20P FY21E FY22E

%

₹ c

rore

Net Sales EBITDA Margin %

58,639

65,932

72,860

48,786

38,930

48,866

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000


units

VECV volumes

31.8 29.9

24.8

18.3

12.2 14.9

40.6 39.1

32.5

22.5

15.9 19.1

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0


%

RoE RoCE

We expect sales to grow at a CAGR of 3.7% over

FY20-22E on the back of -1% CAGR volume growth

during this period and increase in ASPs primarily on

account of BS-VI transition and improving product

mix

We factor in flat volume CAGR at VECV in FY20-22E.

We built a volume decline of 20% in FY21E and a

volume growth of 25% in FY22E

Eicher Motors expected to continue to clock healthy

return ratios; albeit with a downward bias




Exhibit 7: Segment-wise, model-wise volume break up at RE for Q4FY20

Source: SIAM, ICICI Direct Research

Exhibit 8: Segment-wise volume break up at VECV for Q4FY20


Q 4FY19 Q 4FY20 Yo Y (%) Q 4FY19 Q 4FY20 Yo Y (%) Q 4FY19 Q 4FY20 Yo Y (%)

M o to rcycl es 1,89,372 1,55,110 -18.1% 6,790 7,760 14.3% 1,96,162 1,62,870 -17.0% 5.9

250-350cc 1,79,284 1,45,548 -18.8% 530 1,315 148.1% 1,79,814 1,46,863 -18.3%

Bullet 350 Tw inspark 38,391 22,723 -40.8% 4 - -100.0% 38,395 22,723 -40.8%

Bullet Electra Tw inspark 5,587 12,707 127.4% - 56 NA 5,587 12,763 128.4%

Thunderbird 350 14,695 3,265 -77.8% 267 84 -68.5% 14,962 3,349 -77.6%

Class ic 350 1,20,611 1,06,853 -11.4% 259 1,175 353.7% 1,20,870 1,08,028 -10.6%

350-500cc 5,874 5,294 -9.9% 2,551 2,715 6.4% 8,425 8,009 -4.9%

Class ic 500 2,222 322 -85.5% 782 1,004 28.4% 3,004 1,326 -55.9%

Bullet 500 420 61 -85.5% 72 280 288.9% 492 341 -30.7%

Thunderbird 500 407 1 -99.8% - - NA 407 1 -99.8%

Himalayan 2,825 4,910 73.8% 1,697 1,431 -15.7% 4,522 6,341 40.2%

500-800cc 4,214 4,268 1.3% 3,709 3,730 0.6% 7,923 7,998 0.9%

650 Tw in 4,214 4,268 1.3% 3,709 3,730 0.6% 7,923 7,998 0.9%

Continenta l G T - - NA - - NA - - NA

T o ta l d o m esti c 1,89,372 1,55,110 -18.1%

T o ta l exp o r ts 6,790 7,760 14.3%

G ra n d to ta l (2-W) 1,96,162 1,62,870 -17.0% 3.8

Do m e s tic Exp o r ts T o tal Do m e s tic

m ark e t

s h are (%)

FY19 FY20 Yo Y (%) FY19 FY20 Yo Y (%) FY19 FY20 Yo Y (%)

I. M & H C V 12,559 6,678 -46.8% 1,998 822 -58.9% 14,557 7,500 -48.5% 12.8

Passenger i.e . Bus 1,365 930 -31.9% 118 189 60.2% 1,483 1,119 -24.5% 9.2

G oods i.e . Trucks 11,194 5,748 -48.7% 1,880 633 -66.3% 13,074 6,381 -51.2% 13.7

II. L C V 5,284 3,477 -34.2% 780 326 -58.2% 6,064 3,803 -37.3% 2.9

Passenger 2,033 1,521 -25.2% 226 133 -41.2% 2,259 1,654 -26.8% 11.8

G oods 3,251 1,956 -39.8% 554 193 -65.2% 3,805 2,149 -43.5% 2.0

A . T o ta l VE C V - E i ch er (I + II) 17,843 10,155 -43.1% 2,778 1,148 -58.7% 20,621 11,303 -45.2% 6.0

B . T o ta l VE C V - Vo l vo 389 1,107 184.6% - - NA 389 1,107 184.6% 0.6

T o ta l d o m esti c 18,232 11,262 -38.2%

T o ta l exp o r ts 2,778 1,148 -58.7%

C . G ra n d to ta l (A + B ) 21,010 12,410 -40.9%


m ark e t

s h are (%)




Exhibit 9: Segment-wise, model-wise volume break up at RE for FY20


Exhibit 10: Segment-wise volume break up at VECV for FY20



M o to rcycl es 8,05,273 6,56,651 -18.5% 20,825 39,188 88.2% 8,26,098 6,95,839 -15.8% 5.9

250-350cc 7,64,012 6,14,626 -19.6% 3,789 5,270 39.1% 7,67,801 6,19,896 -19.3%

Bullet 350 Tw inspark 1,37,946 1,30,820 -5.2% 53 14 -73.6% 1,37,999 1,30,834 -5.2%

Bullet Electra Tw inspark 28,297 45,528 60.9% 51 111 117.6% 28,348 45,639 61.0%

Thunderbird 350 71,327 40,185 -43.7% 455 345 -24.2% 71,782 40,530 -43.5%

Class ic 350 5,26,442 3,98,093 -24.4% 3,230 4,800 48.6% 5,29,672 4,02,893 -23.9%

350-500cc 36,093 21,837 -39.5% 12,594 14,321 13.7% 48,687 36,158 -25.7%

Class ic 500 19,282 4,925 -74.5% 5,205 4,672 -10.2% 24,487 9,597 -60.8%

Bullet 500 2,737 786 -71.3% 286 1,985 594.1% 3,023 2,771 -8.3%

Thunderbird 500 3,373 824 -75.6% - - NA 3,373 824 -75.6%

Himalayan 10,701 15,302 43.0% 7,103 7,664 7.9% 17,804 22,966 29.0%

500-800cc 5,168 20,188 290.6% 4,442 19,597 341.2% 9,610 39,785 314.0%

650 Tw in 5,168 20,188 290.6% 4,420 19,597 343.4% 9,588 39,785 314.9%

Continenta l G T - - NA 22 - -100.0% 22 - -100.0%

T o ta l d o m esti c 8,05,273 6,56,651 -18.5%

T o ta l exp o r ts 20,825 39,188 88.2%

G ra n d to ta l (2-W) 8,26,098 6,95,839 -15.8% 3.8


m ark e t s h are (%)


I. M & H C V 43,381 28,884 -33.4% 7,500 3,657 -51.2% 50,881 32,541 -36.0% 12.8

Passenger i.e . Bus 4,151 3,697 -10.9% 569 804 41.3% 4,720 4,501 -4.6% 9.2

G oods i.e . Trucks 39,230 25,187 -35.8% 6,931 2,853 -58.8% 46,161 28,040 -39.3% 13.7

II. L C V 18,351 14,162 -22.8% 2,510 911 -63.7% 20,861 15,073 -27.7% 2.9

Passenger 6,595 5,363 -18.7% 695 271 -61.0% 7,290 5,634 -22.7% 11.8

G oods 11,756 8,799 -25.2% 1,815 640 -64.7% 13,571 9,439 -30.4% 2.0

A . T o ta l VE C V - E i ch er (I + II) 61,732 43,046 -30.3% 10,010 4,568 -54.4% 71,742 47,614 -33.6% 6.0

B . T o ta l VE C V - Vo l vo 1,226 1,107 -9.7% - - NA 1,226 1,107 -9.7% 0.6

T o ta l d o m esti c 62,958 44,153 -29.9%

T o ta l exp o r ts 10,010 4,568 -54.4%

C . G ra n d to ta l (A + B ) 72,968 48,721 -33.2%


m ark e t s h are (%)




Exhibit 11: SOTP valuation

Source: Bloomberg, ICICI Direct Research

Exhibit 12: Valuation Summary


Exhibit 13: Shareholding pattern


F Y22E R em arks

Two -wh eeler b u s in ess -R o yal E n field

E P S (₹) 685

Ta rge t P E multip le (x) 26.0 V a lued R E business a t 26x P /E on F Y22E numbers

P e r sha re va lue (₹) 17,810

Ta rge t marke t cap (₹ crore ) 48,550

C V b u s in ess -V E C V `

P AT 87

Ta rge t P E multip le (x) 15.0 V a lued V E -C V business a t 15x P /E on F Y22E numbers

Ta rge t marke t cap (₹ crore ) 1,309

C ontribution towards E ML 0.54 E ML has 54.4% stake in V E C V

Targe t marke t cap towards E ML (₹ crore ) 712

P e r sha re va lue -V E C V E iche r (₹) 260

Tota l ta rge t marke t cap (₹ crore ) 49,262

P er sh are valu e (₹ ) 18,070

Net S ales G ro wth E P S G ro wth P E E V /E B ITD A R o NW R o C E

(₹ cr) (% ) (₹) (% ) (x) (x) (% ) (% )

F Y18 8,965.0 27.5 719 17.3 23.5 15.0 29.9 39.1

F Y19 9,797.1 9.28 808 12.4 20.9 14.8 24.8 32.5

F Y20P 9,153.6 (6.6) 670 (17.0) 25.1 19.3 18.3 22.5

F Y21E 7,925.3 (13.4) 495 (26.1) 34.0 24.1 12.2 15.9

F Y22E 9,852.8 24.3 691 39.5 24.4 16.9 14.9 19.1

(in %) Mar -19 Ju n -19 Se p -19 De c-19 Mar -20

Promoter 49.3 49.3 49.3 49.3 46.0

FII 32.5 33.2 31.9 31.2 27.7

DII 4.6 4.7 7.2 8.2 11.1

O thers 13.6 12.8 11.6 11.3 15.2




Financial Summary

Exhibit 14: Profit and loss statement | crore


Exhibit 15: Cash flow statement | crore


Exhibit 16: Balance Sheet | crore


Exhibit 17: Key ratios


(Year-en d March ) F Y19 F Y20P F Y21E F Y22E

To tal o p eratin g In co m e 9,797.1 9,153.6 7,925.3 9,852.8

G rowth (% ) 9.3 -6.6 -13.4 24.3

R aw Mate ria l E xpenses 4,845.7 4,770.9 4,447.4 5,493.3

E mployee E xpenses 702.4 795.8 718.9 756.2

O ther E xpenses 1,134.1 1,181.5 890.6 1,066.6

Tota l O pera ting E xpenditure 6,893.9 6,973.3 6,214.2 7,511.7

E B ITD A 2903.1 2180.3 1711.1 2341.2

G rowth (% ) 3.4 -24.9 -21.5 36.8

D eprecia tion 300.3 381.5 396.3 418.7

Inte rest 7.3 18.9 11.4 12.0

O ther Income 443.4 543.3 502.8 544.1

P B T 3,038.9 2,323.2 1,806.2 2,454.5

O thers 0.0 0.0 0.0 0.0

Tota l Tax 1,077.0 527.4 455.2 618.5

P AT 2202.8 1827.5 1350.6 1883.5

G rowth (% ) 12.4 -17.0 -26.1 39.5

E P S (₹) 808.1 670.4 495.4 690.9


P ro fit after Tax 2,202.8 1,827.5 1,350.6 1,883.5

Add: D eprecia tion 300.3 381.5 396.3 418.7

(Inc)/dec in C urrent Asse ts -286.6 64.7 182.7 -177.3

Inc/(dec) in C L and P rovisions -218.5 -75.7 -264.9 376.0

C F fro m o p eratin g activ ities 1998.0 2198.1 1664.6 2501.0

(Inc)/dec in Investments 838.0 -878.0 -800.0 -1,500.0

(Inc)/dec in F ixed Assets -789.7 -746.9 -500.0 -500.0

O thers -14.8 193.1 -90.8 14.1

C F fro m in vestin g activ ities 33.5 -1431.8 -1390.8 -1985.9

Issue /(B uy back) o f E quity 0.0 0.0 0.0 0.0

Inc/(dec) in loan funds 35.9 -15.5 -50.0 -50.0

D ividend pa id & dividend tax -410.3 -410.3 -272.6 -340.8

O thers 96.1 -355.1 0.0 0.0

C F fro m fin an cin g activ ities -278.2 -780.8 -322.6 -390.8

Net C ash flow 1,753.2 -14.6 -48.8 124.3

O pening C ash 1,212.0 2,965.2 2,950.6 2,901.8

C lo s in g C ash 2965.2 2950.6 2901.8 3026.1


L iab ilities

E quity C apita l 27.3 27.3 27.3 27.3

R eserve and S urplus 8,891.4 9,953.6 11,031.6 12,574.3

To tal S h areh o ld ers fu n d s 8918.7 9980.9 11058.8 12601.5

Tota l D ebt 186.8 171.3 121.3 71.3

D e fe rred Tax L iability 273.9 252.2 218.3 271.4

O the rs 120.8 234.4 224.1 240.2

To tal L iab ilities 9500.1 10638.6 11622.6 13184.4

Assets

G ross B lock 2,785.2 3,669.7 4,231.8 4,731.8

L ess: Acc D eprecia tion 910.6 1,292.2 1,688.4 2,107.2

Net B lo ck 1874.6 2377.5 2543.4 2624.7

C apita l WIP 449.7 312.2 250.0 250.0

Tota l F ixed Asse ts 2,324.4 2,689.7 2,793.4 2,874.7

Investments 4,922.5 5,748.7 6,598.7 8,148.7

Inventory 633.4 572.4 434.3 539.9

D ebtors 90.3 86.8 76.0 94.5

O the rs 252.5 252.4 218.5 271.7

C ash 2965.2 2950.6 2901.8 3026.1

Tota l C urrent Asse ts 3,941.4 3,862.1 3,630.6 3,932.1

C reditors 1,234.1 1,027.7 868.5 1,079.8

P rovisions 33.0 33.9 28.7 35.7

O the rs 619.6 749.4 648.9 806.7

Tota l C urrent L iabilities 1,886.7 1,811.0 1,546.1 1,922.1

Net C u rren t Assets 2054.7 2051.1 2084.5 2010.0

O ther Non current asse t 198.5 149.2 145.9 151.0

Ap p licatio n o f F u n d s 9500.1 10638.6 11622.6 13184.4


P er sh are d ata (₹)

E P S 808.1 670.4 495.4 690.9

C ash E P S 918.2 810.4 640.8 844.5

B V 3,271.7 3,661.4 4,056.8 4,622.7

D P S 125.0 125.0 100.0 125.0

C ash P e r S ha re 1,184.8 1,507.3 1,788.4 2,358.1

O p eratin g R atio s (% )

E B ITD A Margin 29.6 23.8 21.6 23.8

P B T / Net sa les 26.6 19.7 16.6 19.5

P AT Margin 22.6 20.0 17.0 19.1

Inventory days 23.6 22.8 20.0 20.0

D ebtor days 3.4 3.5 3.5 3.5

C reditor days 46.0 41.0 40.0 40.0

R etu rn R atio s (% )

R oE 24.8 18.3 12.2 14.9

R oC E 32.5 22.5 15.9 19.1

R oIC 203.5 91.9 61.4 90.5

V alu atio n R atio s (x)

P /E 20.8 25.1 34.0 24.4

E V / E B ITD A 14.8 19.3 24.1 16.9

E V / Net S a les 4.4 4.6 5.2 4.0

Marke t C ap / S a les 4.7 5.0 5.8 4.7

P rice to B ook V a lue 5.2 4.6 4.2 3.6

S o lven cy R atio s

D ebt/E quity 0.0 0.0 0.0 0.0

C urrent R a tio 0.6 0.7 0.6 0.6

Q uick R a tio 0.2 0.3 0.3 0.3




Exhibit 18: ICICI Direct Research universe (Auto & Auto Ancillary)


S ecto r / C o m p an y C MP TP M C ap

(₹) (₹) R atin g (₹ C r) F Y20E F Y21E F Y22E F Y20E F Y21E F Y22E F Y20E F Y21E F Y22E F Y20E F Y21E F Y22E F Y20E F Y21E F Y22E

Apollo Tyre (AP O TYR ) 105 100 Hold 6,006 8.3 2.4 7.6 12.6 44.2 13.8 6.2 5.8 4.5 4.8 3.5 6.1 4.8 1.2 4.3

Ashok L eyland (AS HL E Y) 52 55 B uy 15,221 1.2 1.7 3.2 44.7 30.6 16.2 13.2 11.5 7.8 6.0 7.0 11.9 4.7 5.7 10.4

B a ja j Auto (B AAUTO ) 2,780 2,840 Hold 80,445 176.3 134.9 162.1 15.8 20.6 17.2 12.7 15.8 12.1 23.8 23.2 25.1 25.6 17.7 19.1

B hara t F orge (B HAF O R ) 350 320 Hold 16,295 10.8 7.0 12.7 32.3 49.8 27.6 16.3 18.9 14.0 8.4 6.3 9.4 9.4 5.7 9.8

E ich er Mo to rs (E IC MO T) 16,860 18,070 B u y 45,960 670.4 495.4 690.9 25.1 34.0 24.4 19.3 24.1 16.9 22.5 15.9 19.1 18.3 12.2 14.9

E scorts (E S C O R T) 975 1,020 B uy 11,952 39.6 40.8 50.3 24.6 23.9 19.4 16.3 15.7 12.6 18.9 13.3 14.2 14.2 10.1 11.1

E xide Industries (E X IIND ) 155 170 Hold 13,175 9.7 8.1 9.7 16.0 19.1 16.1 9.5 10.1 8.5 16.7 13.8 15.2 13.4 10.3 11.4

Hero Moto (HE R HO N) 2,400 2,500 Hold 47,928 181.9 109.8 147.6 13.2 21.9 16.3 10.6 14.0 10.2 26.5 18.7 23.2 22.7 14.5 17.9

Maruti S uzuki (MAR UTI) 5,550 4,650 R educe 1,67,654 187.1 138.4 194.4 29.7 40.1 28.5 18.2 21.5 15.3 7.4 4.8 7.9 11.7 8.2 10.6

Minda Industries (MININD ) 287 300 B uy 7,525 7.0 7.6 11.8 40.9 37.6 24.3 13.1 11.7 9.4 11.3 11.8 15.0 11.5 11.6 15.4

Ta ta Motors (TATMO T) 105 85 Hold 38,378 -9.1 -2.4 9.1 NM NM 11.5 4.5 4.4 3.6 4.6 5.7 8.5 0.0 2.6 9.3

R o E (% )E P S (₹) P /E (x) E V /E B ITD A (x) R o C E (% )




RATING RATIONALE

ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its

stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold,

Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined

as the analysts' valuation for a stock

Buy: >15%

Hold: -5% to 15%;

Reduce: -15% to -5%;

Sell: <-15%

Pankaj Pandey Head – Research [email protected]

ICICI Direct Research Desk,

ICICI Securities Limited,

1st Floor, Akruti Trade Centre,

Road No 7, MIDC,

Andheri (East)

Mumbai – 400 093

[email protected]




ANALYST CERTIFICATION

I/We, Shashank Kanodia, CFA, MBA (Capital Markets), and Jaimin Desai, CA, Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect

our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. It is also confirmed that

above mentioned Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months and do not serve as an officer, director or employee of the companies

mentioned in the report.

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Research Analyst with SEBI Registration Number – INH000000990. ICICI Securities Limited SEBI Registration is INZ000183631 for stock broker. ICICI Securities is a subsidiary of ICICI Bank which is India’s largest private sector bank

and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on

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ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship

with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the

securities or derivatives of any companies that the analysts cover.

Recommendation in reports based on technical and derivative analysis centre on studying charts of a stock's price movement, outstanding positions, trading volume etc as opposed to focusing on a company's fundamentals and, as

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Our proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein.

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not match or may be contrary with the views, estimates, rating, target price of the Institutional Research.

The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected

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