ZF Commercial Vehicle Control Systems India Ltd. share price target

Slightly lagging ARe of Rs1.79bn, ZF’s Q4 EBITDA rose 17% y/y to Rs1.73bn on less-than-expected revenue. The ADAS regulation draft notification is out, proposing ESC, AEBS and 4 ADAS functions from Oct’26, with content opportunity of >Rs65,000/vehicle for CVs (>3.5-tonne trucks and >5-tonne buses).

ZFCVCS’ (ZFI) operational performance was in line vs our estimate, with EBITDA at INR 1.4bn (-5% QoQ) in Q1FY25. Revenue was down 2% YoY at INR 9.5bn with OEM/export/aftermarket segment revenue at INR 4.3bn/INR 2.8bn/INR 1.3bn.

ZFCVCS (ZFI)’s operational performance was in-line with our estimate, with EBITDA at INR1.46bn versus our estimate of INR 1.5bn (+35% YoY). OEM/export/aftermarket segments’ revenues came in at INR 4.5bn/INR 3.2bn/INR 1.2bn, up ~29%/~23%/~15% YoY, driving overall revenue by 25% YoY.

ZFCVCS (ZFI) has delivered a 10-quarter high gross margin, driven by improving mix and lagged price hikes, resulting in flat EBITDAM QoQ. ZFI’s revenue from domestic OEMs was up ~20% YoY, driven by new business generation from electronic stability control system sales to buses, electronic braking system applications, electronic compressors and driver assistance systems.

ZF CV Control Systems India’s (ZFI) Q4FY23 EBITDA margin at 14.7% was up 104bps QoQ, and was purely driven by operating leverage as raw material prices did not benefit GM QoQ. Revenue increased 12% QoQ driven by CV OEM volume growth led by seasonality and pre-buying, other than expansion in after-market business.

ZF CV Control Systems India’s (ZFI) Q3FY23 EBITDA margin at 13.7% was up marginally by 10bps QoQ despite 60bps improvement in GM as other expense line item was up 20% (as against QoQ revenue growth of 11%).

ZF CV Control Systems India’s (ZFI) Q2FY23 EBITDA margin at 13.6% was up 120bps QoQ, and was largely driven by 150bps gross margin improvement led by favourable movement of input commodities.

ZF CV India’s (ZFI, formerly WABCO) Q4FY22 operating performance was a beat as EBITDA margin came in at 11.4% (up 240bps QoQ) driven primarily by operating leverage benefits. Receding RM cost pressures ahead and governmental push towards higher infra spends augur well for the company as it has a dominant share in the M&HCV braking solutions market.

Q3FY22 revenue up by 15% YoY (6% QoQ) owing to recovery in the Heavy vehicle volume. Also supported by Strong After market growth by 19%YoY. Sale from domestic OEM grew by 26%YoY. Despite higher material cost, EBITDA margin came at 9% due to superior product mix and cost control initiatives. Industry Quarter volume is currently trading at 36% lower to its historical peak in FY19, and provide significant room for growth. Wabco ZF technological advantage in the Heavy vehicle segment...