Now Get InvestmentGuruIndia.com news on WhatsApp. Click Here To Know More
Volume growth to taper; maintain Sell
* Revenue grew 9% yoy to Rs73.9bn (Emkay est.: Rs72.3bn) on 14% growth in volumes but a 5% drop in realization. After a robust 20% growth seen in FY19, we expect revenue growth to taper to 13% over FY19-21E.
* EBITDA margin contracted 390bps yoy to 15.7% (our est.: 16.3%) on aggressive pricing/marketing and adverse mix. We expect 15.7% margin in FY21E vs. 16.5% in FY19, on partial absorption of cost inflation, adverse mix, and continuing marketing efforts.
* We expect volume growth to taper to 6% CAGR over the next two years due to a high base and price increases resulting from regulatory changes. The product mix should remain unfavorable, with a lower share of 3Ws and premium motorcycles.
* We build in revenue/earnings growth of 13%/10% over FY19-21E, with average ROE of 21%. The stock trades at a P/E of 18x/16x on FY20/21E EPS. Maintain Sell with a TP of Rs2,500 based on 13x FY21E core EPS and the value of KTM investment at Rs124/share.
For More Emkay Global Financial Services Ltd Disclaimer http://www.emkayglobal.com/Uploads/disclaimer.pdf & SEBI Registration number is INH00000035
Above views are of the author and not of the website kindly read disclaimer