Buy Subros; target of Rs 410: HDFC Securities

HDFC Securities' research report on Subros

Subros reported a strong 3QFY21 with profit rising 55% QoQ to Rs 274mn. Revenue growth surprised at Rs 6bn (+30/32% YoY/QoQ). The company has gained market share with its key customer Maruti – where Subros has reported 28% sales growth (vs. 23% at Maruti) due to improved model mix (higher share of gasoline models). Reiterate BUY, as the company will benefit from its dominant position in car ACs as well as expanding presence in the Home AC segment. The company is localising more components in this segment, including the ODU and IDU units.

Outlook

We raise our estimates by 3/2% for FY22/23E and set a revised target price of Rs 410 at 22x FY23E.