1 SYNOPSIS WABCO-TVS (INDIA) is a joint venture between TVS Group and WABCO Holdings Inc. The company has pioneered the manufacture of air-assisted and air brake systems for commercial vehicles in India. Net Sales and PAT of the company are expected to grow at a CAGR of 25% and 30% over 2010 to 2013E respectively. WABCO Announces Agreement with IVECO to Supply Anti-Lock Braking Systems with Breakthrough Technology to Certify Electronic Stability Control WABCO-TVS (INDIA) Limited supplies original equipment fitments for vehicles manufactured by Ashok Leyland, TATA Motors etc. During the quarter, the company has reported Net Profit increased to Rs.426.01 million from Rs.337.88 million in previous year same quarter. Years Net sales EBITDA Net Profit EPS P/E FY 11 8949.97 2059.66 1274.32 67.18 17.34 FY 12E 10516.21 2387.50 1522.30 80.26 14.52 FY 13E 11988.48 2700.95 1737.50 91.60 12.72 Stock Data: Sector: Auto Components Face Value Rs. Rs.5.00 52 wk. High/Low (Rs.) 1524.95/863.00 Volume (2 wk. Avg.) 225.00 BSE Code 533023 Market Cap (Rs.In mn) 22097.72 Share Holding Pattern 1 Year Comparative Graph BSE SENSEX Wabco-TVS(India) Ltd C.M.P : Rs.1165.00 Target Price : Rs.1316.00 Date : 03 rd Jan 2012 BUY WABCO-TVS (INDIA) LTD Result Update: Q2 FY 12
19
Embed
WABCO-TVS (INDIA) LTD - Myirisbreport.myiris.com/firstcall/WABNDIA_20120103.pdf · WABCO-TVS (INDIA) is a joint venture ... Leyland, TATA Motors etc. ... WABCO-TVS (INDIA) Limited
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
1
SYNOPSIS
WABCO-TVS (INDIA) is a joint venture between TVS Group and WABCO Holdings Inc.
The company has pioneered the manufacture of air-assisted and air brake systems for commercial vehicles in India.
Net Sales and PAT of the company are expected to grow at a CAGR of 25% and 30% over 2010 to 2013E respectively.
WABCO Announces Agreement with IVECO to Supply Anti-Lock Braking Systems with Breakthrough Technology to Certify Electronic Stability Control
WABCO-TVS (INDIA) Limited supplies original equipment fitments for vehicles manufactured by Ashok Leyland, TATA Motors etc.
During the quarter, the company has reported Net Profit increased to Rs.426.01 million from Rs.337.88 million in previous year same quarter.
Years Net sales EBITDA Net Profit EPS P/E
FY 11 8949.97 2059.66 1274.32 67.18 17.34
FY 12E 10516.21 2387.50 1522.30 80.26 14.52
FY 13E 11988.48 2700.95 1737.50 91.60 12.72
Stock Data:
Sector: Auto Components
Face Value Rs. Rs.5.00
52 wk. High/Low (Rs.) 1524.95/863.00
Volume (2 wk. Avg.) 225.00
BSE Code 533023
Market Cap (Rs.In mn) 22097.72
Share Holding Pattern
1 Year Comparative Graph
BSE SENSEX Wabco-TVS(India) Ltd
C.M.P : Rs.1165.00 Target Price : Rs.1316.00 Date : 03rd Jan 2012 BUY
At the current market price of Rs.1165.00, the stock is trading at 14.52 x FY12E and 12.72 x FY13E respectively.
Price to Book Value of the stock is expected to be at 4.10 x and 3.10 x respectively for FY12E and FY13E.
Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs.80.26 and Rs.91.60 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 25% and 30% over 2010 to 2013E respectively.
WABCO Announces Agreement with IVECO to Supply Anti-Lock Braking Systems with Breakthrough Technology to Certify Electronic Stability Control
WABCO-TVS (INDIA) Limited supplies original equipment fitments for vehicles manufactured by Ashok Leyland, TATA Motors etc.
During the quarter, the company has reported Net Profit increased to Rs.426.01 million from Rs.337.88 million in previous year same quarter.
On the basis of EV/EBITDA, the stock trades at 9.26 x for FY12E and 8.18 x for FY13E.
14
We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs.1316.00 for Medium to Long term investment.
Industry Overview
Poised to grow by over four-fold to US$ 113 billion by 2020, the Indian auto
component industry is one of the front runners for grabbing the global auto
components outsourcing market.
The total passenger car production in the country will jump four times to reach 9
million cars by 2020, according to Automotive Component Manufacturers' Association
(ACMA). Although a major chunk of this will come from the fast growing domestic
market, exports are likely to form around 35 per cent of the total market by 2020.
"India would be among the top-five vehicle producing countries in the world by 2020,"
said Vinnie Mehta, Executive Director, ACMA.
A recent ACMA report puts the turnover of the auto component industry at about US$
26 billion in 2010-11, up 18 per cent from US$ 22 billion in 2009-10. The report
states that 40 per cent of the auto component industry was dominated by body and
structural products in 2009, 20 per cent by engines and exhaust, and 10 per cent
each by suspension and braking parts, transmission and steering parts, electronics
and electrical and interiors. By 2015, body and structural will account for 35 per cent
of the auto component industry, engines and exhaust 20 per cent, suspension and
braking parts, transmission and steering parts and electronics and electrical will
account for 13 per cent each and interiors 9 per cent.
The potential compound annual growth rate (CAGR) of the auto component industry is
estimated to be around 18 per cent in the period 2010-11. Exports from the auto
component industry are estimated to be worth US$ 5 billion in 2010-11, according to
the ACMA report.
Europe is likely to have accounted for 36.9 per cent of India's auto components
exports in 2010-11, followed by Asia with 28.1 per cent and North America with 24 per
15
cent. The industry has witnessed a shift in the composition of exports over the years.
Investments in the auto component industry are estimated at US$ 12 billion in 2010-
11, according to ACMA.
Destination India
India has proven product-development capabilities and proximity to emerging
markets. The Asian country is also turning out to be an attractive destination as a
global outsourcing hub and manufacturing base for original equipment manufacturers
(OEMs), especially after the global economic downturn.
With the finalisation of the Automotive Mission Plan (AMP) India is expected to become
a preferred destination for design and manufacture of automobile. The plan envisaged
an investment of US$ 40 billion and provided a road map to help transform India into
a global automobile player. The AMP proposed a 25-point plan that included making
India a manufacturing and export hub for small cars, multiutility vehicles, two and
three-wheelers, tractors and components.
Furthermore, Indian companies are compliant with global automotive standards, e.g.
the Japanese Industrial Standard Committee (JISC) and
DeutschesInstitutfürNormung (DIN). India offers the advantage of low manufacturing
costs due to economies of scale, low design, research and labour costs, and local
sourcing of tools and components. Large Indian players contribute around 43 per cent
of the total production, while foreign companies such as Magna, Visteon, Valeo,
Bosch, Federal-Mogul Corporation and Denso contribute 15 per cent.
Auto component exports are expected to grow to US$ 30 billion by 2020. India’s share
in the global auto components market is expected to rise from 0.9 per cent in 2008–09
to 2.5 per cent in 2015.
Investments
Auto component maker Jamna Auto would set up two new manufacturing units in
Tamil Nadu, with an investment of around US$ 17.95 million. The new units, at Hosur
and Chennai, will produce parts for commercial vehicles.
16
The world’s first facility to manufacture carbon foam batteries will be set up at Bavla
near Ahmedabad. Firefly Energy India is planning to build a plant to produce carbon
foam batteries at an investment of US$ 28.05 million, the company’s chairman
MukeshBhandari said.
The US$ 1-billion Pawan Kumar Ruia Group is taking big strides in the auto ancillary
space. The group has added yet another German company to its portfolio by acquiring
the assets of automotive fasteners firm, Acument GmbH & Co KG , for an undisclosed
sum.
Bangalore-based Pragati Automation Pvt Ltd (PAL), an Ace Group company engaged in
the manufacture of servo drives and motors, is foraying into Chinese market with the
setting up of its assembly plant in Shanghai. The company is also expanding its
capacities in Bangalore, Belgaum and Kolhapur in Maharashtra. It has drawn up a
capital expenditure plan of US$ 11.22 million for expansion, a top company official
said.
Automotive components maker Amtek Auto has formed a joint venture with South
Korean automaker Autech Corporation to manufacture vehicles for defence, para-
medical,fire fighting and waste management sectors to capitalise on the booming
demand for specialised vehicles. The Delhi-based company will set up an assembly
facility at Daruhera in Haryana with an initial capacity of 10,000 units per year.
JK Tyre& Industries Ltd has signed a memorandum of understanding (MoU) with the
Government of Tamil Nadu for setting up US$ 325.74 million greenfield facility at
Sriperumbudur. The facility would generate US$ 43.43 million every year for the
exchequer and create 1,000 skilled jobs, said RaghupatiSinghania, Vice Chairman and
Managing Director of the company.
German auto component major and industry technology provider Bosch Group has
made an upward revision in its Indian investment programme for 2010-2012 on the
back of booming domestic auto market. VK Viswanathan, President,Bosch India said
the group had decided to increase its investment quantum to US$ 517.5 million from
the proposed US$ 450 million. The group will utilise this investment for its six
separate entities in India.
17
Policy Initiatives
The Ministry of Heavy Industries and Public Enterprises has envisaged the AMP 2006-
2016 to promote growth in the sector. It targets to:
• Increase turnover to US$ 122 billion–US$ 159 billion by 2016 from US$ 34
billion in 2006
• Increase export revenue to US$ 35 billion by 2016
• Provide employment to additional 25 million people by 2016
Moreover, the announcement of Union Budget 2011-12 brought cheers to the auto
components industries in several ways. Some of the highlights are:
• Retained the custom duty rates on auto components.
• Retained the excise duty on small cars, two wheelers and three wheelers at 10
per cent
• Enhanced and unified the export duty on all types of iron ore to 20 per cent ad
valorem. Export duty on iron ore pellets fully exempted.
• Full exemption of basic customs duty on stainless steel scrap.
• Reduced the basic customs duty on Ferro-nickel from 5 per cent to 2.5 per
cent.
• A concessional rate of Nil BCD CVD at 5 per cent and full exemption from SAD
is being extended to specified parts of the hybrid vehicles, namely, battery pack,
battery charger, AC/DC electric motors, and motor controllers.
• Full exemption on basic customs duty and 4 per cent excise duty on batteries