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Miss across all businesses

TICMPL likely to see more fund raise

* TIINDIA’s 3QFY24 result was operationally weak as there was a miss across all business divisions. Amid near-term challenges, the next lag of growth is likely to be driven by new order wins, especially in the metal forms division and a recovery in underlying 2W volumes.

* We reduce our FY24E/FY25E consolidated EPS by ~4% each to factor in near-term weakness in the standalone business. We now value its EV vertical (ex- SCV) at INR350 per share in the SoTP after assigning value to its e-HCV business. The stock trades at 64.3x/51.6x FY24E/FY25E consol. EPS. We reiterate our BUY rating and a TP of ~INR4,025 (premised on Mar’26 SoTP).

3Q margins subdued due to lower activity in underlying industries

* TIINDIA’s revenue grew 11% YoY to INR19b (vs. est. INR20.4b), adversely impacted by lower-than-estimated growth in engineering business/metal form business and a sharp decline in the mobility business.

* Gross margin declined 80bp YoY (down 20bp QoQ) to 36.1%.

* EBITDA rose 12% YoY to INR2.4b (vs. est. INR2.7b). EBITDA margin improved 10bp YoY to 12.6% (vs. est. 13.2%). The sequential decline in margins was attributed to operating deleverage.

* Further, adj. PAT grew 14% YoY to INR1.6b (vs. est. INR1.9b). ? 9MFY24 revenue/EBITDA/adj. PAT grew 1%/6%/13% YoY. ? Mobility business: Revenue declined 15% YoY to INR1.5b and PBIT margin stood at -5.6% (vs. -1.7%/1.4% in 2QFY24/3QFY23 and est. 1.2%).

* Engineering business: Revenue grew 14% YoY to INR12.3b and PBIT margin stood at 12.4% (vs. 13.3%/12.4% in 2QFY24/3QFY23 and est. 13%).

* Metal Forms Product business: Revenue grew 6% YoY to INR3.9b and PBIT margin stood at 12.1% (vs. 13.4%/11.4% in 2QFY24/3QFY23; est. 13.2%).

* Others business vertical: Revenue grew 32% YoY to INR2.2b and PBIT margin stood at 6.3% (vs. 8.4%/6.9% in 2QFY24/3QFY23 and est. 8.2%).

* Consol. business revenue grew 15% YoY to INR42b, but EBITDA/Adj. PAT declined 1%/ 6% YoY to INR4.7b/INR2.7b.

* The company declared an interim dividend of INR2 per share.

* FCF in 3Q stood at INR660m (vs. INR1.1b in 2QFY24 vs. INR1.15b in 3QFY23).

Highlights from the management commentary

* Metal formed- Tenders are coming back; however, the business is getting competitive. Margins seem to be under pressure in the near term. If the announcement of converting 40k wagons to Vande Bharat standard gets implemented, then it will boost demand and add to revenue.

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