Buy Tube Investments of India; target of Rs 4169: Geojit Financial Services

Geojit Financial Services research report on Tube Investments of India

Tube Investment of India Ltd. (TII) is a flagship company of the Murugappa group. It is one of the leading product manufacturers for major industries such as Automotive, Railway, Construction, Mining, etc. Q2FY25, consolidated revenue grew by 14.4% YoY, driven by industrial, power systems, and EV-mobility segments. Meanwhile, standalone businesses like engineering & metal forming grew by low single digit, owing to muted volume growth from the automobile & railway business. TII’s margin contracted by 310bps YoY owing to high input costs & one-time operational costs. Expected to improve in the second half of the fiscal year. Sales for 3-W is progressing well in the southern states, and they are currently concentrating on the northern states with a current market share of 4-5%. Whereas, E-tractors & E-trucks are at their homologation stage, with significant orders expected from the customers in the fourth quarter. For Q2 the E- mobility segment grew by 25% QoQ. Despite market challenges, TIIs is optimistic on achieving double-digit growth across its core segment, driven by diversification, EV expansion, and export. • We believe TIIs diversified and new business opportunities in the EV and Industrial space, give reasonable valuation upside for long term.

Outlook

We value TII on a SOTP basis, giving standalone business at Rs.1,005/share, 25x FY26E EPS, CG Power at Rs.2,775/share, Shanti Gears at Rs.109/share, and EV Mobility at Rs.281/share, cumulatively arriving at a target price of Rs.4,169 per share and upgrading to BUY rating at CMP.

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