Buy GNA Axles: target of Rs 410: Sharekhan

Sharekhan's research report on GNA Axles

GNA reported better-than-expected Q3FY2021 results with net earnings growing by robust 248.6% y-o-y at Rs. 26.6 crore, driven by 28.9% growth in net revenue and 628 bps expansion in EBITDA margin at 17.4%. We expect GNA’s earnings to grow by 29.1% in FY2022E and 22.9% in FY2023E, driven by a 14% CAGR during FY2021E-FY2023E and a 70-bps improvement in EBITDA margin. The stock trades attractively at P/E multiple of 9.6x and EV/EBITDA multiple of 4.6x its FY2023E estimates.

Outlook

We maintain our Buy rating on GNA Axles Limited (GNA) with a revised PT of Rs. 410, factoring in better multiples on a strong traction in business outlook and an upgrade in earnings estimates.