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Result Highlights

• During Q1 FY23, the company sold 5,205 vehicles as against 4,562 units sold in Q4 FY22 and 1,739 units in Q1 FY22. Further, during July, 2022, the company sold 1,900 units as against 1,305 units (+46%, YoY) in July, 2021

On standalone basis, the turnover stood at Rs.96.8 cr as against Rs.32.2 cr in Q1 FY22 and Rs.85.9 cr in Q4 FY22. The loss at the EBITDA level stood at Rs.1.2 cr as against 3.1 cr in Q4 FY22 and Rs.6.4 cr in Q1 FY22

During the quarter, the consolidated turnover stood at Rs.106.7 cr as against Rs.32.2 cr in Q1 FY22 and Rs.92.3 cr in Q4 FY22. The EBITDA turned positive with Rs.1.6 cr as against the losses in Q1 FY22 and Q4 FY22. At the net level, the company continued to incur losses, however, the losses have trimmed as compared to previous quarters.

During the quarter, the automobile business recorded a revenue of Rs.96.8 cr as against Rs.85.8 cr in the previous quarter while the NBFC division clocked in turnover of Rs.9.9 cr as against Rs.9.1 cr in the previous quarter. At the operating level, the automobile segment reported a loss of Rs.3.7 cr as against Rs.5.8 cr while the NBFC division reported a profit of Rs.2.8 cr as against Rs.2.4 cr in the quarter ended March 31, 2022.

During the quarter ended June 30, 2022, Atul Greentech Pvt. Ltd. issued 25 lakh equity shares of Rs.10 each through private placement resulting into a dilution of 20% in shareholding of AAL. Recently, the subsidiary had collaborated with Valeo and Honda Power Pack Energy India Pvt. Ltd. to develop electric vehicles with battery swapping solutions. The electric versions of AAL’s cargo and passenger 3Ws will be equipped with Honda’s swappable battery pack and Valeo’s powertrain system.

OUTLOOK & VALUATION

AAL witnessed a rebound in volumes and realizations leading to good improvement in topline, however, the profitability still remained under check. During the last fiscal, the company’s dominance in passenger vehicles segment restricted the rebound in volumes unlike the 3W industry as the year was impacted by Covid led lockdowns - schools, colleges & offices were shut for major part of the year. In addition, the rural India has been witnessing a slowdown on account of steep inflation. Going forward, we believe that volumes will rebound in the medium-to-long-run with Covid-led issues broadly behind us, company’s focus on volume-growth led by exports and strengthening demand for EVs for last-mile connectivity. To factor in Q1 FY23 results, we have revised our estimates. We now expect AAL to report a topline & EPS of Rs.629.2 cr & Rs.15.9 in FY24E, respectively. Maintaining our P/E target multiple of 17x we derive our revised target price of Rs.270 showcasing an upside of ~54% from current levels with an investment horizon of 18-24 months

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