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Buy Subros; target of Rs 310: HDFC Securities

HDFC Securities is bullish on Subros has recommended buy rating on the stock with a target price of Rs 310 in its research report dated October 24, 2020.

October 26, 2020 / 03:47 PM IST
 
 
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HDFC Securities' research report on Subros


We upgrade Subros to BUY (ADD earlier) as the EBITDA margin surprised at 11.7% (vs 9.5% in FY20), led by higher localisation levels. The management highlights that the double-digit margin range is sustainable, driven by its cost-cutting initiatives and improving production levels. We believe that the parts supplier would benefit from a revival in passenger car volumes and the company’s diversification initiatives. Subros is scaling up its presence in home ACs and railways segment (under the Make in India theme).


Outlook


We raise our FY22/23 estimates by ~19% to factor in improving margin outlook. We value the stock at 21x (in line with its average P/E multiple) and set a revised target price of Rs 310, based on Sep-22 EPS. Key risks: slower economic recovery in India, delayed scale-up in localisation levels.


For all recommendations report, click here


Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: Oct 26, 2020 03:47 pm

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