Atul Auto Ltd. share price target

Attempting a Comeback...: Atul Auto Ltd has reported its operating revenues of Rs. 1,435 mn in Q2FY17 Vs Rs. 1,429 mn in Q2FY16 and Rs. 930 mn in Q1FY17. The company has sold 11761vehicles in Q2FY17 as against 11925 vehicles in Q2FY16 and 7606 vehicles in Q1FY17. We lower down our revenue estimates from earlier estimates and expect the company to register volume growth of 6.0% in FY17E to sell 46,527 vehiclesand around 10.0% volume growth in FY18E to sell 51,179 vehicles.

Atul Auto Ltd has reported decrease in its operating revenues to Rs. 930 mn in Q1FY17 Vs Rs. 1,068 mn in Q1FY16 and Rs. 1,297 mn in Q4FY16. Decrease in the company’s volumes was majorly on account of VAT issue in the state of Gujarat till May 19, 2016 and some registration issues in the state of Punjab. Exports volumes for the quarter stood at 336 vehicles as against 567 vehicles in the same quarter of last year. This was mainly due to the unfavourable conditions in terms of product approvals and currency deterioration in its export countries. Considering good prospects of monsoon and the festive season in Q2FY17E and Q3FY17E, We expect the company to register volume growth of 7.0% in FY17E to sell 46,966 vehicles and around 10.0% volume growth in FY18E to sell 51,662 vehicles. Accordingly, we expect the company to register operating revenue CAGR of around 10.0% during FY16-FY18E to reach Rs. 5,688 mn in FY17E and Rs. 6,426 mn in FY18E.

Valuation Outlook: The company’s optimism in maintaining the growth rate for the year despite dismal performance in Q1FY17, considering the company’s performance in the last 5 years, we expect the company to gain further market share in 3-wheeler segment. We reiterate our “BUY” recommendation, however lowering from our previous target price by valuing it at 20.7x of its FY18E EPS of Rs. 25.8, which is forward mean P/E over its last 5 years for a target price of Rs. 533.

ICICI Securities Ltd | Retail Equity Research Atul Auto's (AAL) Q1FY17 results were below our expectations on all parameters. Revenues declined 12.9% YoY to | 93 crore (vs. our estimate of | 95 crore). Volumes for Q1FY17 declined 13.9% YoY to 7,606 units while the average realisation was up 1% YoY to | 136,418/vehicle. Volumes during the quarter were largely impacted by tax issue (VAT increased from 15% to 20%) specifically in Gujarat. However, the management has clarified that the same has been...

RESULTS OVERVIEW: Disappointing Q1, VAT rate issues in Gujarat hampers volumes, long term story intact Atul Auto reported revenues of INR 93.0cr for Q1FY17 (-12.9% YoY ). The volumes declined 13.9% YoY on account of VAT related issues in Gujarat, its major market (~40% of sales). The issue has been resolved and the management...

ICICI Securities Ltd | Retail Equity Research Atul Auto's Q4FY16 revenues were at | 130 crore, up 5.9% YoY (volume up 2.5% YoY to 10,251 units) vs. our estimate of | 128 crore...

Atul Autos (AAL) 4QFY16 APAT at Rs 109mn ( 24% YoY) was in line with our estimates. Revenues also met expectations ( 6% YoY, volume 3%, ASP 3%). ASP growth was led by a change in the product mix, despite overall pricing softness.

Ravi Shenoy (ravi.shenoy@MotilalOswal.com); Tel: +91 22 30896865 Investors are advised to refer through important disclosures made at the last page of the Research Report. Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P; Capital....

Atul Auto is one of the fastest growing three wheeler companies in India. It caters to diverse group of customers in Cargo and Passenger segment with 0.35 tonnes and 0.5 tonnes capacity platform. The company has strong distribution network of 200 primary dealers and 120 secondary dealers across India.

Atul Autos (AAL) 3QFY16 APAT at Rs 160mn ( 41% YoY) beat our estimates by 11%. Revenues were in line ( 9% YoY, volume 7%, ASP 2%). ASP growth was change in product mix, despite overall pricing softness. EBITDA margin surprised with 388bps YoY rise to 16.6% (higher gross margins).

Buy Atul Auto Ltd at CMP Rs. 510 and add on declines Rs. 439 to Rs. 455 for the target of Rs. 627