Q3FY21 Company Update - Wabco India - ICICI Direct

Wabco India (WIL) reported a strong Q3FY21 performance. Net sales were at Rs. 566 crore, up ~29% YoY on the back of a healthy pick-up in CV performance across domestic and export markets. Margins improved 40 bps QoQ to 15.5%, with the performance being impressive as it encompassed ~450 bps QoQ decline in employee & other expenses as percentage of sales i.e. operating leverage benefits, with gross margins contracting ~420 bps QoQ. Consequent PAT was higher by 35% YoY to Rs. 52 crore.

Valuation & Outlook

We build ~70% PAT CAGR for WIL in FY21E-23E (albeit on a low base), with margins seen improving to ~15.5% trajectory by that time due to better operating leverage and increasing share of value additive products. We value WIL at Rs. 7,350 i.e. 45x P/E on FY23E EPS of Rs. 164/share, upgrading it from HOLD to BUY (earlier TP: Rs. 5,220). We believe premium valuations are justified amid MNC parentage and CV cycle upswing in the offing.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_WabcoIndia_CoUpdate_Feb21.pdf

Shares of WABCO INDIA LTD. was last trading in BSE at Rs.6084 as compared to the previous close of Rs. 6224.55. The total number of shares traded during the day was 1236 in over 486 trades.

The stock hit an intraday high of Rs. 6700 and intraday low of 6051. The net turnover during the day was Rs. 7715782.

Source : Equity Bulls

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