Dolat Capital is bearish on SML ISUZU has recommended sell rating on the stock with a target price of Rs 364 in its research report dated September 14, 2020.
Dolat Capital's research report on SML ISUZU
SML Isuzu reported a dismal performance in Q1FY20. Revenue stood at Rs 287mn (-94% YoY) attributed to sharp 95% fall in volume (202 units) offset by increase in net ASP because of better spare parts revenue. Bus to Truck volume mix was in ratio of 44:56 with market share of 7.8% in the bus segment. EBITDA loss stood at Rs 357mn attributable to high RM costs and negative operating leverage. The company reported net loss of Rs 523mn due to poor operating performance. We continue to maintain negative view as FY21 could be tough year as challenges persist in the form of regulatory changes (cost rise due to the move from BS-IV to BS-VI) and negative economic impact of Covid-19. As schools and colleges remain shut, we do not see any revival in demand in the bus segment in H2FY21. The increasing penetration of EVs in bus segment and rising competitive intensity are key threats for the company.
We maintain our negative view on the stock and maintain our Sell rating with a target price of Rs 364 (18x FY23E EPS).
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