January 23, 2017 / 17:35 IST
It indicated decent growth in automotive replacement segment as well as non-auto segment, while OEM segment was highly subdued across sub segments. Moreover, lower margin performance and falling bottom line indicates higher competition and reducing pricing power to pass on cost escalation.
Outlook
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Considering slowdown in Auto space, improving power situation, AMRJ’s earnings growth would fall from >35% to <20% (over FY16-FY19). We believe that the stock’s current valuation of 25xFY18E for <20% earning CAGR is unjustifiable and it appears expensive. We reiterate our SELL on AMRJ. Lower earnings growth and falling return ratio doesn’t justify its premium valuation despite strong management.
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