320-x-100_uti_gold.jpg" alt="Advertisement">
Buy Tube Investments of India Ltd For Target Rs.4,169 By Geojit Financial Services Ltd
Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel
Long term growth to remain intact.
Tube Investment of India Ltd. (TII) is a flagship company of the Murugappa group. It is one of the leading product manufacturers for major industries such as Automotive, Railway, Construction, Mining, etc.
* Q2FY25, consolidated revenue grew by 14.4% YoY, driven by industrial, power systems, and EV-mobility segments. Meanwhile, standalone businesses like engineering & metal forming grew by low single digit, owing to muted volume growth from the automobile & railway business.
* TII’s margin contracted by 310bps YoY owing to high input costs & one-time operational costs. Expected to improve in the second half of the fiscal year.
* Sales for 3-W is progressing well in the southern states, and they are currently concentrating on the northern states with a current market share of 4-5%. Whereas, E-tractors & E-trucks are at their homologation stage, with significant orders expected from the customers in the fourth quarter. For Q2 the E- mobility segment grew by 25% QoQ.
* Despite market challenges, TIIs is optimistic on achieving double-digit growth across its core segment, driven by diversification, EV expansion, and export.
* We believe TIIs diversified and new business opportunities in the EV and Industrial space, give reasonable valuation upside for long term.
Outlook & Valuation
TIIs has a diversified revenue stream with growth in the core sector, and industrial segments like railways & power continue to support long-term revenue visibility. The company is exploring diversification beyond the automotive sector due to cyclicality in the industry, especially considering the weak performance in the Passenger Vehicle (PV) and Heavy Commercial Vehicle (HCV) segments. Further, recovery in EV expansion builds stability for the long term. We value TII on a SOTP basis, giving standalone business at Rs.1,005/share, 25x FY26E EPS, CG Power at Rs.2,775/share, Shanti Gears at Rs.109/share, and EV Mobility at Rs.281/share, cumulatively arriving at a target price of Rs.4,169 per share and upgrading to BUY rating at CMP.
For More Geojit Financial Services Ltd Disclaimer https://www.geojit.com/disclaimer
SEBI Registration Number: INH200000345
