Tube Investments of India Ltd. share price target

Tube Investment of India (TII) is a flagship company of Murugappa group. It is one of the leading product manufacture for major industries such as Automotive, Railway, Construction, Mining, etc. Post consolidation Q2FY22 revenue grew by 133% YoY (Not comparable). Margin contracted by 210bps due to RM cost. TIIs strategy to de-risk from the auto sector (Revenue mix 70%) and concentrate more on industrial segments through acquisitions or inorganic growth, to support long term revenue visibility....

Tube Investment of India (TII) is a flagship company of Murugappa group. It is one of the leading product manufacturers for major industries such as Automotive, Railway, Construction, Mining, etc. TIIs strategy to de-risk from the auto sector (Revenue mix of 70%) and concentrate more on industrial segments through acquisitions or inorganic growth, to support long term revenue visibility. Acquisition of CG Industrial & Power Co, which provides power and industrial system related service in India, and abroad will...

Going forward, with TII being the sole credible bicycle player in the listed space, its strong focus on return ratios matrix (RoE, RoCE at ~18%) and cash generation ability (CFO yield at ~10%, FCF yield at ~6%), lead us to build a positive stance on the company. Consequently, we assign BUY rating on TII with a target price of | 425, valuing it at 26x P/E on FY20P EPS of | 16.3/share. Key risk to our call is more than expected delay in demand...

Tube Investments of India Limited (TIIL) is engaged in manufacturing of bicycles, fitness equipment, electric scooters in the cycle segment; tubes, strips and tubular components in the engineering segment; car doorframes & channels, automotive and industrial gears in the metal formed products segment. TIIL offers two well established brands of bicycles- BSA' & Hercules' and indigenously developed...