Hold Wabco India; target of Rs 7200: ICICI Direct

ICICI Direct's research report on Wabco India

Wabco India’s (WIL) revenues grew 42.2% YoY to | 747 crore, above our estimate of | 716 crore. Revenue from domestic business grew 56.2% YoY to | 534 crore mainly due to low base of last year and ongoing demand drivers (high infrastructure spends, overloading restrictions) in the CV space. In terms of revenue mix, OEM revenue - | 422 crore (includes ABS revenue ~| 97 crore), revenue from spares & operating income were | 79 crore & | 34 crore, respectively.

Outlook

WIL is well placed to capture this growth opportunity, going forward. Though we believe the revenue growth opportunity does persist, it will face some pressure on margins in the near term. Thus, we maintain our HOLD rating valuing the stock at 35x FY20E EPS, with a target price of | 7200.