ICICI Securitie's research report on CIE Automotive India
EU revenue was down 11% YoY due to a decline in Metalcastello revenue (down 32% YoY). Metalcastello is likely to see a similar revenue quarterly run-rate of EUR 15mn in coming quarters and is expecting recovery only from CY25. EU EBITDAM stood at 17%, up 100bps QoQ; CAIL is taking cost-cutting actions such as eliminating temporary workers to manage costs in this lower turnover period. European PV industry saw a decline of 7% YoY in Q2CY24, and outlook remains weak with 2–3% decline in volumes in CY24 and flattish growth over the next 4–5 years. EU business is also gradually accumulating orders for EVs, with 55% new orders this year being for EVs. Currently, EV momentum has slowed and management expects a delay of two years in the faster electrification process.
Outlook
CIE Automotive (CAIL) Q2CY24 adj. consolidated PAT of INR 2.2bn was in-line with our estimate, with 4% miss in revenue getting balanced by 50bps beat in EBITDAM. EU revenue continued to be weak and was down 15% QoQ, at INR 7.6bn, on the back of continued slowdown in Metalcastello and car market; further, H2CY24 is at best set to be equal to H1 amidst larger number of working holidays. India revenue was up 1% QoQ at INR 14.5bn and is likely to ramp up in coming quarters with new launches by target OEMs and new projects kick starting for Bosch/Royal Enfield/Stellantis. We cut our CY24E/CY25E EPS by 5%/4% to account for continued slowdown in the Europe business and delay in ramp up of fresh projects. Maintain BUY with a DCF-based revised TP of INR 675 (earlier INR 646), implying 24x CY25E EPS, with the change in TP being driven by rollover.
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