1
Please refer to important disclosures at the end of this report
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Automotive Axles Limited (AAL), manufactures drive axles, non-drive axles,
front steer axles, specialty & defence axles and drum & disc brakes. AAL has
been increasing its customer penetration through its existing verticals as well
as new product developments in existing and new verticals. It has diversified
into the manufacture of components for air actuated SCAM brakes. To
further increase its value proposition, the company has expanded its product
portfolio in recent years to include off-highway axles. With the improvement
in road infrastructure in the country, many operators are opting for multi-axle
trucks which have a better load bearing capacity and quicker turnaround
time. The demand for CVs is likely to pick up on account of a) pick-up in
construction & mining activity and b) expectation of revival in consumption-
driven sectors owing to rural recovery. The CV demand is also likely to
benefit from stricter compliance with respect to overloading which will further
aid in AAL revenue. AAL has recorded revenue and bottom line growth of
12% & 31% during FY2013-17 and is a virtually debt free company.AAL’s
fund flow from operations increased to `97.08cr during FY2017 from
`53.86cr in FY2013, supported by stable working capital intensity and
healthy increase in operating revenues. Going forward with no major
capex plans, the company’s cash flow position is expected to be strong. The
company has a ROE of 15.50% and currently trading at valuation PE 35.34x
of TTM earnings. Hence BUY.
BUY
CMP `1413
52 Week High / Low
1599/582
Avg. Daily Volume
4,441
Auto Parts
Market Cap (` cr)
2,132
10
BSE Sensex
33,442
Nifty
10,328
Face Value (`)
Reuters Code
ATOA.NS
ATXL:IN
0.4
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Automotive Axles Ltd
Others | Auto Parts
Dec 15, 2017
2
Automotive Axles Ltd |Auto Parts
2
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Automotive Axles
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)