Dolat Capital recommended accumulate rating on Atul Auto with a target price of Rs 456 in its research report dated August 07, 2018.
Dolat Capital's research report on Atul Auto
Atul Auto (ATA) top line growth was in-line with our estimates at ` 1,361 mn but margins were lower due to higher employee expenditure. ATA reported volume growth of 17.8% at 10,568 units which were largely driven by higher exports. Domestic volumes grew by 9% whereas the exports reported a growth of 100% in the quarter Q1FY19 as compared to the same period in the previous year. This was due to a small base. Going forward, we believe that ATA volume growth can improve only if distribution reach is expanded. Existing areas will offer limited growth despite addition of new products.
ATA has been investing in electric autos, but a meaningful scale will depend on evolvement of whole ecosystem – mainly charging points and battery cost. We retain our Accumulate rating with a target price of ` 456.
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