EIS is bullish on Talbros Auto has recommended buy rating on the stock with a target price of Rs 190 in its research report dated February 15, 2016.
EIS's research report on Talbros Auto
TACL’s consolidated net sales for the quarter de-grew by 5.4% to Rs 953.7 Mn, whereas the standalone revenues de-grew by 8.5% to Rs 746.6 Mn, indicating that the major reason for the de-growth was due to bad performance from the gasket and forging business. This was due to slowdown in growth of 2W segment and subdued performance in Forging segment, which continued to remain in pain on account of weaker Euro, as 57% of revenue comes from exports in this segment. Change in accounting method of Magneti Marelli Talbros JV had an impact of Rs 15 mn on the total net sales.
TACL witnessed a subdued 9MFY16 due to subdued economy and adverse currency movement. Its core gasket business commands 38% of the gasket market in India. The company has been continuously diversifying its product portfolio by new product launches and increasing client footprint. The positive impact of lower commodity prices is expected to get reflected in the next fiscal year, thus improving EBITDA margin. Incorporating subdued 9MFY16 performance, we have cut down our future projections, however our DCF based target price remains at same level of around Rs 190, as we roll over our valuations to FY18E earnings. After some recent corrections, the stock now offers 103% upside from current level. Thus, we maintain our rating at Buy.
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