ICICI Securities: Wabco India Posts A Washout Quarter On All Fronts
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ICICI Securities Report
Wabco India Ltd.’s Q1 FY21 operating numbers missed consensus estimates as top line declined approximately 74% YoY to Rs 1.6 billion, operating leverage turned adverse.
Ebitda margin contracted 3,088 basis points YoY to -17.2% as employee costs remained sticky (up 15% QoQ).
On a longer-term basis, we like Wabco India’s business characteristics of: a) dominant market share in medium and heavy commercial vehicle segment, b) strong new product technology from global parent, and c) diversified revenue mix between original equipment manufacturer (27%), exports (26%) and aftermarket (46%).
However, due to pending closure of the tendering period of open offer (August 2020-end) the stock has yet to realign to underlying business fundamentals (which remain weak both in domestic and export segments).
Stock remains expensive (47 times enterprise value to Ebitda and 74 times price to earning on FY22E basis).
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