We value AAL at | 215 i.e. 9x P/E on FY20 EPS of | 24 and assign BUY rating. Although the 3-W segment is one of the hardest hit due to social distancing norms amid Covid-19, it is also difficult to catch the bottom of the cycle. Hence, at the CMP, AAL provides an attractive risk-reward opportunity with inexpensive valuations, healthy balance sheet and sound capital efficiency....

Atul Auto's (AAL) 2QFY19 earnings missed our expectations on account of poor operating-level performance. EBITDA margin for the quarter at 13.0% was ~90bps below our estimate because of 15% YoY jump in raw material costs, causing gross margin to fall to 25.2%, the lowest in the past five quarters. Additionally, a 33% YoY increase in other expenses and 11% YoY rise in staff costs resulted in further pressure on operating-level margin. Realisation for the quarter grew 2% sequentially against our expectation of 1% QoQ improvement. Absolute EBITDA at Rs229mn fell 15% YoY, and was 6% below our estimate....

Looking out for margin and distribution expansion Atul Auto (ATA) top line growth was in-line with our estimates at ` 1,765 mn but margins were lower due to higher other expenditure. ATA reported volume growth of 9.5% at 12,224 units which were largely driven by higher exports. Domestic volumes grew by 4.4% YoY whereas the exports...

Atul Auto (ATA) top line growth was in-line with our estimates at ` 1,361 mn but margins were lower due to higher employee expenditure. ATA reported volume growth of 17.8% at 10,568 units which were largely driven by higher exports. Domestic volumes grew by 9% whereas the exports reported a growth of 100% in the quarter Q1FY19 as compared to the same period in the previous year. This was due to a small base. Going forward, we believe that ATA volume growth can improve only if distribution reach is expanded. Existing areas will offer limited growth despite addition of new products. ATA...

Atul Auto's (AAL) 4QFY18 earnings missed our expectations on account of poor operatinglevel performance. EBITDA margin for the quarter at 12.0% was 240bps below our estimate because of higher-than-expected other expenditure. We note that the company had in the preceding quarter incurred one-time cost towards new product development (alternativefuel vehicle) and also expenditure towards development of new BS-VI diesel engine. The management had, at that time, indicated that as the development expenses represent a part of the costs to be incurred in future, AAL may need to incur more such expenditure on account of research-related activity and the same trend seems to have continued in 4QFY18, thereby impacting operating-level performance. Employee expenses witnessed a sequential rise as the December 2017 quarter included one-time gains on account of...

Earnings below estimates: Revenue grew by 45% yoy (+17% qoq) to Rs1.51bn (Emkay Est: Rs1.53bn; Consensus Est: Rs1.51bn), broadly in line with estimates. Volume increased by 39% yoy (+7% qoq) to 11,624 units, while realization grew by 4% yoy (flat qoq) to Rs129,542/unit. EBITDA margin expanded by 220bps yoy to 12% (Emkay Est: 14.4%; Consensus Est: 13.8%), which was below estimate due to higher-than-expected RM cost and other expenses. The company is increasing product prices in Q1FY19 to counter commodity inflation. Overall, PAT grew by 84% yoy (+21% qoq) to Rs117mn (Emkay Est: Rs144mn; Consensus Est: Rs135mn)....

Atul Auto's (AAL) 3QFY18 earnings missed our expectations on account of poor operating-level performance. EBITDA margin for the quarter at 12.1% was 300bps below our estimate because of higher other expenditure, comprising one-time cost of Rs22.5mn towards new product development (alternative-fuel vehicle) and expenditure towards development of new BS-VI diesel engine. It was indicated that as the development expenses represent a part of the costs to be incurred in future, AAL may need to incur more such expenditure on account of research-related activity. Excluding the one-off item, other expenditure rose on account of higher marketing costs and packaging expenses relating to export sales. Employee expenses fell during the quarter on...

Maintain BUY with TP Rs.488 Atul Autos (AAL) 3Q EBITDA at Rs 156mn (-17% YoY,) was below estimates. EBITDA margin contracted to 12.2%(-190bps YoY) dragged by higher product development cost (towards new 3W on alternative fuel segment and BS6 diesel engine). Net revenue at Rs 1.28bn (-4% YoY) led by 10% fall in volumes to 9.9k, offset by 6.3% increase in net ASP. APAT came in at Rs 97mn (-21% YoY).

Atul Auto (ATUL) is a five decade old three-wheeler manufacturer of auto rickshaws, pick-up vans and chassis of passenger vehicles based in Gujarat. It offers a range of diesel and compressed natural gas (CNG) three-wheeler products in both front and rear engine platform for passenger and cargo transportation. Its product portfolio consists of almost 50 models catering to passenger and goods carrier segments. ATUL continues to be number 1 player in Gujarat with...

Atul Auto's (AAL) 2QFY18 earnings were better than our expectations on account of strongerthan-expected margins. EBITDA margin for the quarter at 16.8% was 275bps above our estimate because of lower other expenditure, soft raw material costs, better vendor negotiations and higher-than-expected realisation growth. Realisation growth for the quarter was strong, with realisation up 7% YoY because of price hikes done for implementation of BS IV emission norms. Absolute EBITDA at Rs269mn grew 22% YoY and was 21% above our estimate, while PAT at Rs170mn was 14% above our estimate. At the conference call, the company indicated that it is looking at good volume growth momentum in the coming months as the demand has improved. Also, last year the base was low because of demonetisation which should result in strong YoY...

We have reduced our FY18/19/20E EPS in the range of 8-10% factoring in delay in STA approval for its gasoline vehicle and reduce TP to Rs.488 (16x Sept 19 earrings) vs 528 earlier. Maintain BUY. Atul Autos (AAL) 2Q EBITDA at Rs 269mn (+22% YoY, +122% QoQ) was above estimates. EBITDA margin expanded to 16.8% (+142bps YoY, 647bps QoQ) led by cost control measures and benefit of operating leverage. Net revenue at Rs 1.6bn (+11.4% YoY) was led by 4% increase in volumes to 12.2k and 7% net ASP. APAT came in at Rs 170mn (+24% YoY, +117% QoQ).

EBITDA margin expanded by 140bps yoy (+660bps qoq) to 16.8% (Emkay Est: 14.5%). Margin improved qoq due to benign mix, better pricing from vendors, lower marketing/warranty costs and enhanced scale. Management expects double-digit growth in volume in FY18. Also, momentum in volume growth will continue in FY19E, led by: 1) Launch of alternative-fuel 3Ws (Petrol, CNG, LPG and Electric) across India by end-FY18, 2) Increase in exports, from monthly runrate of ~300 units currently to over 500 units in FY19, and 3) Network expansion. Our FY18E EPS estimate remains unchanged at Rs21.9, but we have cut our FY19E EPS forecast by 5% to Rs26.5, due to lower volume growth assumption, factoring in...

We initiate coverage on Atul as a BUY with a price objective of Rs.716, representing a potential upside of 60% over a period of 24 months. At the CMP of Rs.448 the stock is trading at 13.1X its estimated earnings of FY20. We have assigned PE multiple of 21X on the FY20 EPS of Rs.34.10 to arrive at the target price.

We had a meeting with the management of Atul Auto (AAL) recently to gauge its performance in the aftermath of a relatively challenging environment in FY17. The key takeaways from the meeting are as follows: Market share trend: The management believes that with the uncertainty surrounding the previous financial year behind, AAL can regain its lost market share by launching new vehicles in the coming quarters. Compared to overall three-wheeler industry volume contraction of 8.9% in 1QFY18, AAL posted 18% YoY growth. AAL's domestic sales volume improved 12% YoY against 25% industry decline. AAL's cargo vehicle segment registered...

Atul Auto's (AAL) 1QFY18 operating performance was above our expectations because of 6% YoY growth in realisation (3% above estimate). EBITDA margin expanded by 150bps YoY to 10.4%, while net sales at Rs1.16bn was up 25% YoY because of 18% jump in volume and 6% rise in realisation. The spike in actual selling price (ASP) of vehicles can be attributed to the company passing on the cost of new engines to customers post implementation of BSIV emission norms. The company went for a price hike in the range of 3% - 4% for its BS-IV vehicles in April 2017, but witnessed gross margin shrinking by 150bps in 1QFY18 because of the rise in commodity prices. Going forward, the management is confident of clocking double-digit volume growth in FY18 backed by growth in domestic and export markets....

We value AAL at Rs 528 (17x FY19E earnings). Maintain BUY. Atul Autos (AAL) 1Q EBITDA at Rs 121mn (+46% YoY, +17% QoQ) was in line with estimates. EBITDA margin expanded to 10.4% (+148bps YoY, 49bps QoQ). Net revenue at Rs 1.16bn (+25% YoY, 12% QoQ) was led by 18% increase in volumes and 6% net ASP. APAT came in at Rs 78mn (+62% YoY, +26% QoQ).

Soft Performance Reported in FY17; Launch of Electric 3Ws to Support the Growth Agenda: Revenue from operations for Atul Auto Ltd for Q4FY17 have declined to Rs. 1041 Mn Vs Rs. 1348 Mn in Q3FY17, marking a decline of 22.8% QoQ. The company was able to sell 8,385 vehicles in Q4FY17 compared to 10,521 vehicles in Q4FY16. PAT margin for the debt free, cash rich company for FY17 was recorded at 7.8% marking a drop of 109bps YoY.

ATUL Autos (AAL) 4Q EBITDA at Rs 103mn (-41% YoY, -45% QoQ), was in line with estimates. The EBITDA margin dropped 347bps to 9.9%. Net revenue at Rs 1.04bn (-20% YoY, -23% QoQ) was led by a 20% drop in volumes.

Buy Atul Auto between Rs. 453-415 for the target of Rs. 545.

Growth Trajectory Interrupted by Demonetisation in Q3FY17; Electric 3W and Global Markets Hold Key for Future: Revenue from operations for Atul Auto Ltd for Q3FY17 has declined to Rs. 1348Mn Vs Rs. 1517 Mn in Q3FY16. The lacklustre performance can be ascribed to theadverse impact of demonetisation on the market demand. The company was able to sell 11,043 vehicles in Q3FY17 compared to 12,609 vehicles in Q3FY16. PAT marginfor the debt free, cash rich company for 9MFY17 was recorded at 8.4% marking a drop of 72bps YoY.