Hold ZF Commercial Vehicle Control Systems: target of Rs 13600: ICICI Securities

ICICI Securities's research report on ZF Commercial Vehicle Control Systems

ZF Commercial Vehicle Control Systems India (ZFCV) reported Q1FY26 EBITDA margin of 13.5% (vs. I-Sec estimate 17%), was down ~120bps YoY/380bps QoQ. Margin contraction was led by higher employee cost and other expenses. Revenue was up 3% YoY, at INR 9.8bn, with OEM/export/aftermarket segments’ revenue at INR 4.6bn/INR 2.5bn/INR 1.4bn and growth of ~8%/(12)%/9% YoY. We are building in ~9% revenue CAGR for FY25–27E, led by a strong outlook for exports (including through ZF parent company), continued robust growth in services and ~6% CAGR in the OEM segment.

Outlook

Maintain HOLD, with a revised TP of INR 13,600 (vs. INR 13,050), based on 45x FY27E EPS (earlier DCF based).