Dolat Capital: Subros Well Poised To Ride The Passenger Vehicle Recovery  
An employee welds armor-plating to the roof of a car at a factory in Jalandhar, Punjab, India. (Photographer: Anindito Mukherjee/Bloomberg)

Dolat Capital: Subros Well Poised To Ride The Passenger Vehicle Recovery  

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Dolat Capital Report

Subros Ltd. reported weak performance in Q1 FY21, impacted by slowdown in passenger vehicle segment and the nationwide lockdown. Revenue de-grew 87% YoY to Rs 738 million (versus estimate Rs 1.4 billion).

Ebitda turned negative to Rs 299 million (versus estimate Rs 115 million) due to negative operating leverage. Production in Q1 was equivalent to two weeks of regular working days.

Management stated that the production is gradually ramping up and now back to 75% of pre-Covid-19 levels. However, system inventory which was piled up due to lockdown will be liquidated in Q2.

At present, Subros has Rs 2.4 billion worth of inventory (versus normal inventory of Rs 1.9 billion).

We expect the company to be a key beneficiary of recovery in the PV segment and market share gain by Maruti Suzuki India Ltd. owing to increasing preference for low-end entry-level cars. Maruti Suzuki accounts for approximately 70% of revenue for Subros.

Click on the attachment to read the full report:

Dolat Capital Subros Q1FY21 Result Update.pdf


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