Subros Ltd. share price target

Subros reported a revenue growth of 12.1% y-o-y in 3Q FY25, while 9MFY25 sales increased 9.8% y-o-y, led by higher volume and Start of Production (SOP) of a new business award. Quarterly EBITDA increased 27.4% y-o-y while EBITDA margin expanded 111 bps to 9.2%.

Subros reported a modest revenue growth of 1.8% y-o-y in 2Q FY25, whilst 1H FY25 sales increased 8.7% y-o-y led by higher volume and Start of Production (SOP) of new business award.
Quarterly EBITDA increased 8.9% y-o-y while EBITDA margin expanded 60 bps to 9.2%.

Subros reported healthy y-o-y revenue growth of 16.8% in 1Q FY25, led by an increase in volume and additional revenue generation due to Start of Production (SOP) of rail coach air-conditioning during the quarter.
Quarterly EBITDA increased 63.4% y-o-y while EBITDA margin expanded 272 bps.

Subros Limited (Subros) Q4FY21 result was above our estimates at revenue and EBITDA level. EBITDA margin for the quarter stood at 9.7% vs our estimates of 10% mainly on account of higher RM cost and other expenses. We believe pent up demand and preference for personal mobility has helped PV industry to register decent volumes in Q4FY21. For Subros, we build PV revenue growth of 20%/15% for FY22E/FY23E respectively on account of lower base. We expect Govt. Infra push would help CV segment to recover in coming quarters. We expect Subros revenue/earnings to grow at ~17%/46% CAGR over FY21-FY23E with EBITDA margin of ~10% in FY23. We have arrived FY23E...

2Q FY21 revenues declined by 8% y-o-y, witnessing significant improvement from the 87% y-o-y decline in 1Q FY21. Consequently, 1H FY21 saw a degrowth of 50% y-o-y which is attributable to the COVID-19 outbreak/lockdown and its impact on business operations and demand. While 2Q FY21 EBITDA increased by 21% y-o-y, 1H FY21 EBITDA was down 76% on account of the operating loss recorded in 1Q FY21. PAT bounced back strongly in 1Q FY21 with a y-o-y growth of 34%....

Subros Limited (Subros) Q1FY21 revenue was below our estimates while EBITDA/PAT came above our expectation. Revenue was impacted due to lower OEM production whereas subros operating expenses were significantly down on account of cost initiatives taken by management. We expect ~20% industry de-growth for 4W industry in FY21 and expect strong recovery in FY22. We have not seen any meaningful revenue contribution from railways/home Ac/truck and bus segment in last 3 years and do not expect any significant change in revenue mix in near term to offset the slowdown in PV industry. However we cut our revenue estimates for FY21 by 8% factoring lower...

Subros reported a decent performance in Q4FY20, despite several headwinds, including moderation in PV segment, impact of lockdown and input cost pressures. Revenue declined 11.5% YoY to Rs 4.5bn led by slowdown in PV segment and absence of revenue from the home AC segment. EBITDA margin contracted by 153bps YoY to 9.1% on account of negative operating leverage. The Company is the key player in the Automotive AC market and commands ~45% market share in PV segment. We expect the company...

We maintain our ADD rating on the stock. We believe that while Subros will benefit from a recovery in volumes at Maruti Suzuki- its largest customer (which accounts for over 3/4th of revenues), the diversification initiatives are delayed due to the COVID outbreak (home AC segment ramp-up is pushed back, CV and other segments will witness sluggish trends).

Subros Limited (Subros), Q3FY20 results were above our estimates at operating level. EBITDA margin stood at 10.4% vs our estimates of 8.5% on account of lower RM cost and lower operating expenses. Adj. PAT for the quarter stood at Rs135mn above our estimates of Rs113mn. We maintain our revenue/earnings CAGR of 4%/15% over FY19-22E with EBITDA margin of ~8% and average free cash flow of ~Rs1bn. We change our rating to ACCUMLATE (earlier BUY) due to recent increase in share price and...

Reiterate BUY on Subros given (1) Consistent increase in market share in PV-ACs (46%, +4% from FY19) despite a sluggish environment (2) Diversification into newer segments including home AC components (3) Deleveraging of balance sheet (Gross debt of Rs 1.9bn in 1HFY20 vs. Rs 3.2bn in FY18) and (4) Its strategic partnership with Denso will enable the transition to next generation products. 2QFY20 revenues (-12% YoY) were impacted by weak demand environment. Subros continues to gain market share in pass car ACs (currently at 46%) and is well positioned for any pick up in industry demand over FY21/22. We are lowering our estimates by ~5% to factor in the 2Q results. Maintain BUY with a revised TP of Rs 270 (at 17x Sep-21 EPS).

Market Share Gain Continues: During Q2FY20, Subros sales declined by 12 percent YoY to Rs5bn (below our estimates of Rs 5.1 BN).

Subros is the largest automotive air conditioning systems company in India with >40% market share in the domestic passenger vehicle industry, supplying mainly to MSIL and other players like M&M;, TAMO and Renault Nissan. It also supplies air conditioning systems to commercial vehicles (MS -70%), railways (MS 77%), home AC, Engine Cooling Modules (ECM), buses and reefers. With strong demand in non PVs segment, Subros has been de-risking its business model by reducing its dependence on subdued PV segment as witnessed in Q1 FY20, where the...

Maintain BUY as (1) Subros has gained market share in the PV segment in a slowing market (up by 3%) (2) The co is diversifying into newer segments including home AC component supplies and expects the share of other segments to double to 40% in the medium term. (3) With Denso as its strategic partner, the co has relevant technology for next generation products In a sluggish market environment, Subros delivered ~8% YoY revenue growth driven by the ramp up in the home AC segment (post acquisition of Zamil in 4QFY19). Reiterate BUY with a revised TP of Rs 230 (at 15x FY21 EPS, 17x earlier). We are lowering earnings by 11% / 7% over FY20/21E to factor in lower margins. We reduce our multiple due to the slowdown in the pass car industry, which accounts for over 80% of its revenues.

During Q1FY20, Subros sales grew by 7.6 percent YoY to Rs5.7bn (above our estimates of Rs5.4bn). Decline in sales was driven primarily by subdued volume growth in Car and Non-Car segment.

Decent show amid tough environment, growth levers intact Subros 1QFY20, revenue beat estimate to ` 5.7bn (+7% YoY) led by wining new business (HVAC for new Wagon R and AC kit for Renault Nissan for Brazil facility) and incremental revenue from Home AC business (` 620mn). EBIDTA margin contracted by 111bpsYoY to 9.6 % on account of weaker product mix (low margin in home AC). Despite the slowdown in PVs segment Subros' core PV AC business managed to grew in single digit in 1Q led by shift in demand towards petrol variants plus rising wallet share...

Higher tax marred the Q4 PAT: For Q4FY19, Subros reported decline in Revenue/EBITDA by 6%/14%, YoY, impacted by auto industry slowdown. EBITDA margins declined by 92bps YoY due to higher raw material cost (due to change in product mix and currency appreciation) and other expenses. However lower depreciation and interest cost (due to debt repayment) and higher other income led to PBT growth of 7% YoY which got pulled down due to higher tax rate of 45%. Thus PAT declined by 13% YoY, due to absorption of carry forward of unabsorbed depreciation....

Improved market share in FY19 Despite the ongoing pain in the PV sales, Subros was able to increase its market share from 40% to 42% in the PV segment. The increased share was on account of new business from Maruti and M&M.; Client wise Subros market share stood at Maruti (74%), Tata motors (35%), M&M; 30%, Renualt 25% and Nissan 25%. The company expects its market share to improve further on...

Double digit sales growth to continue: During FY19, Subros reported 11.1% sales growth to Rs21.2bn and 27.3% PAT growth to Rs 795mn.