Automotive Axles Ltd. share price target

We retain BUY with target price of Rs 842 (16% upside) on back of expected recovery in CV segment. Resurfacing of Covid cases and extended lockdown remains key risk to our assumptions.

Q1FY21 was a washout quarter for Automotive Axles; it reported a loss of Rs 23 cr in Q1FY21 on account of subdued performance of Automobile industry esp. CV as Automotive Axles derives all its revenues from the commercial vehicle segment.

Automotive Axles reported a disappointing and steep decline in Q4FY20 results with revenue declining by 65% YoY to Rs 169 cr on back of steep decline in CV volumes and the last week of March affected by lockdown.

COVID 19 IMPACT: CV DEMAND LED FALL EXPECTED

Automotive Axles Ltd. (AAL) reported another quarter of forgettable performance in Q3FY20 with revenues of Rs 165 cr (66% YoY & 18% QoQ) as deep production cuts by OEM due to extremely weak demand in CV industry.

Automotive Axles Ltd. (AAL) reported muted set of results for Q1FY20; it reported revenues of Rs 418 cr due to subdued demand environment in auto segment, EBIDTA of Rs 49 cr (?13% YoY & ?17% QoQ) was largely in line with sales decline.

and fuel costs the long term demand is intact as BS VI implementation and scrappage policy will trigger a strong and continuous demand for the sector. The company being market leader in axles business is well placed in gaining incremental business from its...

Automotive Axles Ltd., a JV between Kalyani Group and Meritor Inc., is a leading player in the manufacturing of automotive axles for Medium & Heavy Comm. Vehicles (M&HCV;), esp. the rear wheel axles which is an integral and load bearing part of the drive line.

Outlook & Valuation: We believe AAL is comfortably placed to tap the upcoming opportunity in the industry owing to improving road infra, BS-VI pre-buying and foray into new segment coupled with expansion of capacity by 35-40%. At the CMP of Rs1,250, the stock is available at 12.3x its FY2020E EPS of Rs96. We have assigned a multiple o..

Buy Automotive Axles Ltd. at Rs. 701 and add on declines at Rs. 645-651 for targets Rs. 782, 827.