Subros Ltd. share price target

We attended the analyst meet of Subros Ltd (Subros) and also visited their facility in Noida (Delhi). Subros is one of the leading manufacturers of compressors, condensers, heat exchangers and all connecting elements required to complete AC loop and caters to all segments viz. Passenger Vehicles, Buses, Trucks, Refrigeration Transport, offroaders & Railways. It also competes with companies like Hanon, Mahle Behr and Sanden in India. Currently, Subros has a capacity of 1.5mn pieces p.a. and is running at ~90% of capacity utilization. It holds ~70%/40%/40%/20% share of business with Maruti Suzuki (MSIL), Mahindra & Mahindra (M&M;), Tata motors (TTMT) and Renault Nissan respectively in passenger vehicle business. In CV segment, Subros tied up business with...

New Orders Continue to Boost Performance: Subros posted revenue of Rs. 4972Mn in Q2FY18 up by 14.9% YoY and 19.8% QoQ where EBITDA margins stood at 10.9% this quarter as against 10.7% during the previous quarter.

Recently, Subros reported Q2FY18 results. Following are the key highlights: o Net Sales Up by 14.9% (YoY) to `4.9bn o EBITDA Margins expanded by 48bps (YoY) to 10.9%...

We roll forward our TP (Rs, 318 20x) on Sept-19 and maintain BUY. Subros 2QFY18 revenue (+15% YoY, Rs. 4.9bn) and EBITDA (+20% YoY, Rs 544mn) numbers came in broadly in line with our expectations. However, PAT (-8% YoY, Rs. 160mn) was impacted by deferred tax payment of Rs 33.9mn. Revenue growth was driven by a strong increase in PV sales and incremental revenue from new business verticals like bus/truck ACs and radiators. EBITDA margin at 10.9% (+48bps YoY) benefitted from operating leverage.

Double digit growth in FY18 Subros Management expects 15-16% sales growth in FY18 on an overall basis on the back of robust volume growth expectations of Maruti as well as significant jump in the contribution from supply of Radiator business to Denso. Market share improvement of 200bps in Passenger Vehicle Segment Market share of Subros in the Passenger Vehicle Air Conditioning segment has improved remarkable by 200bps from 37% last year to 39% in Q1FY18 led by increased supplies to Maruti Suzuki, Mahindra and Mahindra and Renault Nissan. New greenfield project Subros is in the process of acquiring land and the project...

Steadily recovering from the fire accident: Subros reported revenue of Rs. 4148Mn in Q1FY18 up by 28.9% YoY and remained flattish at 0.03% QoQ where EBITDA margins stood at 10.7% this quarter as against 11.0% in the previous quarter due to higher raw material costs on account of change in product mix and increased commodity prices.

We roll forward our TP on Jun-19E and value Subros at Rs 318 (20x Jun-19E EPS) vs Rs 295 earlier. Subros 1QFY18 numbers were marked by better operational performance. The trajectory of revenue growth (at Rs 4.2bn, +29% YoY) was encouraging, driven by strong increase in PV sales and incremental revenue from new business verticals like bus/truck ACs and radiators. EBITDA margin came in higher at 10.7% (+45bps YoY) led by lower employee expenses (-90bps YoY). APAT at Rs 114mn (+12% QoQ) was boosted by fall in interest cost (-16% QoQ).

Full year realization of radiator supplies from FY18 Subros started supplying radiators to Maruti (Via Denso) from February 2016. However due to fire incident at Manesar plant, radiator manufacturing was stopped. The Company has resumed supplies from Q4FY17 and generated revenues of `220mn. The management expects...

Subros 4Q net revenue came in at Rs 4.14bn ( 15% YoY), driven by strong growth in PV sales and incremental revenue from new biz verticals like bus/truck ACs and radiators. EBITDA was at Rs 456mn, with margin at 11% (-25bps YoY), below estimates).

Radiator supply to Maruti to begin from February 2017 Subros started supplying radiators to Maruti (Via Denso) from February 2016. However due to fire incident at Manesar plant, radiator manufacturing was stopped. The Company expects to resume the radiator production from this month (February bruary 2017) and anticipates to book `11.2bn sales from this facility on yearly basis. Order from Indian Railways Subros has been supplying cab mounted HVAC units to Indian Railways for driver cabin application. It has received its third order from the Indiann Railways for supplies of 306 kits, the value of which is estimated to be `120mn....