Force Motors Ltd
Industrials - Capital Goods
Exports to Drive Revenue
Q4FY17 revenue stood at Rs. 8376Mn as against Rs. 6291Mn in Q3FY17 recording a growth of 33.1% QoQ driven by volume growth of 38.5% at 9512 vehicles. However, on YoY terms revenue declined by 6.8% on account of volume de-growth by 5.6% mainly led by BS-III ban.
EBITDA doubled during QoQ at Rs. 919Mn driven by reduction in operating expenses and declined by 14.3% YoY on account of inventory pile-up leading margins to improve by 639bps QoQ at 11.0% and decline by 95bps YoY. PAT declined by 25.3% YoY at Rs. 549Mn as compared to Rs. 735Mn in Q4FY16.
Total FY17 revenue stands at Rs. 30694Mn up by 1.5% compared to FY16 despite volume decline by 2.6% clocking 32477 vehicles in FY17 as against 33354 vehicles during FY16 attributed by increase in exports by 27.4% which led to higher realization by 4.2% YoY.
Their major vehicle segment is the LCV passenger segment, tractors and Utility vehicles. Their utility segment took a hit during Q4F17 which de-grew by 14.8%, while Commercial Vehicle (CV) segment and Exports have nominally grown by 1.4% YoY in Q4FY17.
Their LCV passenger vehicle sales have increased by 2.2% clocking 21795 vehicles in FY17 as against industry growth of 3.9% which led to a slight drop in market share by 72bps from 43.6% in FY16 to 42.9% in FY17. Also, their auto components segment (Engines) grew by ~5.0% in FY17 YoY as compared to previous year’s growth of 58.9% initially driven by capacity addition.
Therefore, considering the constraints of the CV industry due to BS-III ban, we expect revenue for FY18E to remain flat at 2.6% growth majorly attributed by exports. We have introduced FY19E estimations where revenue is expected to grow at CAGR of 4.0% during FY17-19E driven by volume growth at CAGR of 2.8% during the same period.
Valuation and Outlook
Currently, the stock is trading at 36.5x FY19E EPS. We value the company at 39.0x P/E for FY19E EPS. We recommend view on Force Motors with a “HOLD” rating for a target price of Rs. 4800.
Industrials - Capital Goods
Exports to Drive Revenue
Q4FY17 revenue stood at Rs. 8376Mn as against Rs. 6291Mn in Q3FY17 recording a growth of 33.1% QoQ driven by volume growth of 38.5% at 9512 vehicles. However, on YoY terms revenue declined by 6.8% on account of volume de-growth by 5.6% mainly led by BS-III ban.
EBITDA doubled during QoQ at Rs. 919Mn driven by reduction in operating expenses and declined by 14.3% YoY on account of inventory pile-up leading margins to improve by 639bps QoQ at 11.0% and decline by 95bps YoY. PAT declined by 25.3% YoY at Rs. 549Mn as compared to Rs. 735Mn in Q4FY16.
Total FY17 revenue stands at Rs. 30694Mn up by 1.5% compared to FY16 despite volume decline by 2.6% clocking 32477 vehicles in FY17 as against 33354 vehicles during FY16 attributed by increase in exports by 27.4% which led to higher realization by 4.2% YoY.
Their major vehicle segment is the LCV passenger segment, tractors and Utility vehicles. Their utility segment took a hit during Q4F17 which de-grew by 14.8%, while Commercial Vehicle (CV) segment and Exports have nominally grown by 1.4% YoY in Q4FY17.
Their LCV passenger vehicle sales have increased by 2.2% clocking 21795 vehicles in FY17 as against industry growth of 3.9% which led to a slight drop in market share by 72bps from 43.6% in FY16 to 42.9% in FY17. Also, their auto components segment (Engines) grew by ~5.0% in FY17 YoY as compared to previous year’s growth of 58.9% initially driven by capacity addition.
Therefore, considering the constraints of the CV industry due to BS-III ban, we expect revenue for FY18E to remain flat at 2.6% growth majorly attributed by exports. We have introduced FY19E estimations where revenue is expected to grow at CAGR of 4.0% during FY17-19E driven by volume growth at CAGR of 2.8% during the same period.
Valuation and Outlook
Currently, the stock is trading at 36.5x FY19E EPS. We value the company at 39.0x P/E for FY19E EPS. We recommend view on Force Motors with a “HOLD” rating for a target price of Rs. 4800.
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