ICICI Direct recommended hold rating on Wabco India with a target price of Rs 6510 in its research report dated May 27, 2019.
ICICI Direct's research report on Wabco India
Wabco India (WIL) reported a dismal performance in Q4FY19. WIL's revenues for Q4FY19 declined 15.5% YoY to Rs 663 crore and for FY19 was at Rs 2,853 crore, up 11.1% YoY. EBITDA came in at Rs 85.4 crore with attendant EBITDA margins at 12.9% (down 148 bps QoQ). Margins were hit sequentially by increase in raw material costs and other expenses. Consequent reported PAT fell 32.5% YoY to Rs 52.1 crore. The company declared a final dividend of Rs 9 per share for FY19.
Wabco is an industry leader in the braking solutions (CV space) and has been steadily increasing its content/vehicle through enhanced safety and security system. Wabco is expected to benefit from double digit volume growth expectation in the domestic CV industry in FY20E. This makes us maintain our positive bias on the stock. Going forward, we factor in sales, EBITDA, PAT growing at 7.2%, 11.3% & 11.8% CAGR, respectively, over FY19P-21E. We value the stock at 35x FY21E EPS of Rs 186 to arrive at a target price of Rs 6,510 and retain our HOLD rating.
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