Buy Blackbuck; target of Rs 775: ICICI Securities

ICICI Securities's research report on Blackbuck

In Q2FY26, Blackbuck’s core revenues grew ~37% YoY led by 55% QoQ growth in fuel sensors. New businesses grew >2x YoY and 19% QoQ led by Superloads and vehicle financing. We note, Blackbuck has grown ahead of the market in H1FY26 despite having ~50% market share in the tolling business. Also, growth in fuel sensors is a bright spot given it is not driven by regulation rather by customer needs. This, in our view, bodes well for upselling and cross selling products to its captive base in the future. However, EBITDA declined ~9.6% QoQ in Q2FY26 given investments into future growth and annual salary increments. Given the recent stock run up (up ~55% in last 6 month), the risk-reward skew has weakened. However, given the strong growth outlook, we maintain BUY. We increase our TP to INR 775, as we roll forward our valuation by six months.

Outlook

We maintain BUY on Zinka with a revised three-stage DCF-based TP of INR 775, as we roll forward our valuations by six months. This implies 40x one-year forward EV/EBITDA.