CIE Automotive India Ltd. share price target

Q1CY17 results werea head of estimates at operational level driven by margin improvement across operations.Consolidated EBITDA margin at 12%saw benefits from closure of the Jeco (Germany) plant and merger of Bill Forge

ICICI Securities Ltd | Retail Equity Research Mahindra CIE's Q1CY17 consolidated revenue (gross sales) was at | 1521 crore (up 19.4% YoY) largely supported by the integration of Bill Forge (BFL). Revenue from Indian operation (standalone + BFL + gears business) grew 52.6% YoY to | 623 crore while revenue from its European business grew 3.8% YoY to | 904 crore Consolidated EBITDA came in at | 194.5 crore while margins were at 12.8% (up 170 bps YoY & 390 bps QoQ) vs. our estimate of 11.8%. The...

Consolidated EBITDA margins expanded by 699bps to 8.9% Consolidated PAT for CY16 increased to `1.7bn Vs `1.9bn Consolidated Sales Up By 9.3% To 13.3Bn MHCIE's India sales (43%of consolidated sales) increased by 36.7% yoy mainly on account of consolidation of newly acquired company Bill Forge (BFL) during the quarter. During Q4CY16, its international sales...

Q4CY16 results were below estimate sat operational level due to higher-than-anticipated costs relating to closure of Jeco plant.Consolidated EBITDA margin at 8.7%currently should see benefits from closure of the plant and Bill Forge merger. We factor in EBITDA margin of 12.3%/13.0% for CY17E/18E.

ICICI Securities Ltd | Retail Equity Research Mahindra CIE's Q4CY16 consolidated revenue was at | 1330 crore (up 8.5% YoY) vs. our estimate of | 1,358 crore. Its newly acquired Bill Forge (BFL) is a part of its consolidated numbers. Hence, results are not comparable. In Europe, MCI discontinued production of some parts that were unprofitable while in India demonetisation impacted volumes of its top two clients thereby impacting its overall revenue Consolidated EBITDA came in at | 118.5 crore while margins were at...

ICICI Securities Ltd | Retail Equity Research Mahindra CIE's consolidated revenues for Q3CY16 were at | 1249.5 crore (down 1.2% YoY) vs. our estimate of | 1405 crore. This was after 1) MFE turnover reduction due to Jeco plant closure and 2) lower steel and surcharge prices impacted the realisation of the stamping division. EBITDA margin came in 11%, up 80 bps YoY vs. our estimate: 11.5%. Reported PAT came in at | 44.4 crore (vs. estimate of | 73 crore) Standalone revenues for Q3CY16 increased 2.5% YoY to | 443.5 crore...

Mahindra CIE (MCI) is ready to embark on its Phase 2 (2017-20) growth strategy, which mainly focuses on expansion. The company is looking to expand into newer geographies (expand within India & Asean countries) and segments (entry into plastics & aluminium products). It is also redefining its product portfolio and optimising plant locations. Its Phase 1 (2014-17) strategy of consolidation has made good progress in areas of optimising operations, turnaround of various segments, controlling capex, reducing debt, among others. MCI’s announcement on acquiring 100% stake in Bill Forge Pvt Ltd (BFPL) for | 1,331.2 crore is its first step as a part of its Phase 2 strategy. BFPL is a precision forging & machining with focus on 2-W & PV auto components, primarily for steering, transmission & wheelrelated assemblies.

It has six manufacturing plants across India with capabilities in cold & warm forging in addition to hot forging. In FY12-16, BFPL’s revenue, EBITDA, PAT registered CAGR of 13%, 30%, 29%, respectively. As of FY16, its net debt was at | 75 crore while the deal is valued at 11x FY16 EV/EBITDA multiple, which we believe is fairly valued.The acquisition of BFPL is largely positive thereby diversifying its concentration risk (hence increasing our CY17E revenue & PAT by 11% & 18%). However there would be equity dilution of 17%. Thus, we continue to value MCI at 11x CY17E EV/EBITDA & maintain our target of | 225 with BUY rating.

ICICI Securities Ltd | Retail Equity Research Mahindra CIE's consolidated revenues for Q2CY16 were at | 1372 crore (up 2.8% YoY) vs. our estimate of | 1440 crore. EBITDA margin was at 11.2%, up 13 bps YoY, 48 bps QoQ (above our estimate: 11%). Reported PAT was at | 62.4 crore (vs. estimate of | 75 crore)....

Key highlights: Results were marginally ahead of estimates as subsidiaries posted strong performance, but domestic business remained sombre. While there has been a delayed pickup in MACA's earnings power, the company is on the right track with: (1) increasing automationofIndiaplantsboostingefficienciesandimprovingmargins,(2)costsavingsdue to Jeco closure becoming visible from Q3CY16, recouping additional costs that it had to...