Accumulate Tube Investments of India; target of Rs 1746: Geojit

Geojit's research report on Tube Investments of India

Tube Investment of India (TII) is a flagship company of Murugappa group. It is one of the leading product manufacture for major industries such as Automotive, Railway, Construction, Mining, etc. Q3FY22 revenue grew by 4.3%QoQ. This was largely driven by double digit growth from the export market and 8%QoQ from CG power and Industrials. Despite inflated RM cost, TII margin improved 128bps QoQ owing to superior product mix and cost pass through benefit. CG Industrial & Power Co, which provides power and industrial system related service in India and abroad, will continue to enhance TII product portfolio and revenue mix. TII’s entry into 3W electric manufacturing, will mark the group’s foray into automobile manufacturer from a ancillary player. Due to supply shortage extended the launch to Q2FY23.

Outlook

Given the strong fundamentals and strategic change adopted in the company’s segment mix, we value TII on a consolidated basis and recommend Accumulate with a target price of Rs1,746 at CMP.