Accumulate Wabco India; target of Rs 7111: Prabhudas Lilladher

Prabhudas Lilladher's research report on Wabco India

For Q1FY19, Wabco India (WIL) reported net profit of Rs748mn, up 38% YoY (lower ~3% QoQ), above PLe of Rs678mn. While overall revenue for the quarter was ahead of our expectations at Rs7.5bn (~8% above PLe), growing 42% YoY / down ~5% QoQ (where other operating income was higher 13% YoY), operating performance missed estimates with EBITDA margin lowering 170bps YoY / 100bps QoQ to 13.3% (PLe: 14.4%).

Outlook

The company is debt-free and is expected to sustain return ratios of over 20% in FY19/20E. At CMP, the stock is trading at 38.2x FY19E and 33.0xFY20E EPS. We maintain 'Accumulate' with a target price of Rs7,111 (earlier Rs8,086), at 35x Mar'20E EPS.