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EBITDA/PAT miss estimates; EU business disappoints

* 4QCY24 consol. revenue declined ~6% YoY to INR21.1b (est. INR20.96b), due to weak EU market performance. CY24 revenue/EBITDA declined ~3%/5% YoY, while adj. PAT grew 3% YoY.

* 4Q EBITDA stood at ~INR2.99b (est. INR3.2b), down 9% YoY. EBITDA margins stood at 14.2% (est. 15.2%), down 40bp YoY/130bp QoQ.

* Adj. PAT stood at INR1.8b (est. INR1.9b), up 1% YoY.

* India business performance: Revenue declined 2% YoY to ~INR15.2b (in line). India EBITDA margin stood at 14.5% (est. 15.3%, down 20bp YoY). Overall business was stable as growth was in line with the market.

* EU business performance: Revenue declined 22% YoY to ~INR5.9b (est. ~INR5.8b). Sales decline was due to low market performance in light vehicles and especially CVs in Europe and US off-road market. EBITDA margins stood at 13.3% (est. 14.8%, down 120bp YoY). EBITDA margin contraction was due to a drop in turnover.

* CY24 CFO/FCF declined ~36%/43% YoY.

* The board recommended a final dividend of INR7 per share for CY24 vs. INR5 per share in CY23.

* The stock currently trades at ~17.8x/15.4x CY25E/CY26E consol EPS.

Key highlights from the presentation:

* India light vehicle forecast: IHS forecasts production growth of 5.8% during CY24-25 and 4.6% during CY24-29.

* India MHCV forecast: IHS forecasts production growth of 8.4% during CY24-25 and 5.3% during CY24-29.

* India tractor forecast: CRISIL forecasts 6-8% decline in the domestic tractor industry in FY25 and 4-6% CAGR over FY24-29.

* India 2W forecast: CRISIL forecasts 11-13% growth in the domestic 2W industry in FY25 and 7-9% CAGR over FY24-29.

* EU (w/o Russia) light vehicle forecast: IHS Global forecasts that light vehicle production will decrease in CY25 by 4.8% as compared to CY24 and will post a CAGR of 0.7% during CY24-29.

* EU (w/o Russia) MHCV forecast: IHS Global forecasts that MHCV production will increase in CY25 by 3.0% as compared to CY24 and will clock a CAGR of 3.7% during CY24-29.

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