1 hr ago
Equirus Sees 42% Upside in Auto Ancillary Stock
A brokerage called Equirus studied an auto-parts company and recommended buying its stock.
It believes the company can grow by making lighter vehicle parts.
Export orders could also help the company earn more money.
A business called Donghee TLA may add higher-value suspension components.
Equirus expects revenue and profits to grow over the next few years.
It estimates that light-weighting and exports could generate significant revenue by FY31E.
The brokerage believes the market is focusing too much on risks linked to the company’s core emissions business.
It therefore set a target price of Rs 1,340, about 42% above the assessed price of Rs 944.
Equirus initiated coverage with a “Long” recommendation on the unnamed auto ancillary stock.
The brokerage cited light-weighting, export orders, and Donghee TLA components as growth drivers.
Equirus projects light-weighting and export revenue of Rs 13 billion and Rs 3.5 billion, respectively, by FY31E.
Revenue, EBITDA, and profit after tax are forecast to grow at CAGRs of 12%, 15%, and 15% during FY26-FY29E.
Equirus set a December 2027 target price of Rs 1,340, implying approximately 42% upside from Rs 944.
- Who
- Equirus and the unnamed auto ancillary company covered in its report.
- What
- Equirus initiated coverage with a “Long” recommendation and a Rs 1,340 target price.
- Where
- When
- The target is for December 2027; the earnings forecast covers FY26-FY29E, with revenue projections through FY31E.
- Why
- Equirus expects light-weighting, export orders, Donghee TLA components, acquisitions, and potential inorganic opportunities to support growth.
Growth Case
Risk Considerations
Valuation and business outlook
Growth Case
Equirus believes light-weighting, exports, acquisitions, and potential inorganic opportunities are being undervalued, supporting its Rs 1,340 target price.
Risk Considerations
The company’s core emissions business remains a risk, although Equirus argues that current valuations exaggerate this risk.
Key facts
- Recommendation
- Long
- Assessed price
- Rs 944
- December 2027 target price
- Rs 1,340
- Implied upside
- Approximately 42%
- Projected revenue CAGR
- 12% for FY26-FY29E
- Projected EBITDA CAGR
- 15% for FY26-FY29E
- Projected PAT CAGR
- 15% for FY26-FY29E
- FY31E revenue projections
- Rs 13 billion from light-weighting and Rs 3.5 billion from exports
Quotes
Equirus
Brokerage providing coverage and valuation analysis of the auto ancillary stock
“In this backdrop, secured light-weighting and export orders support diversification, while the Donghee TLA adds higher-value suspension components. We project light-weighting/ export revenue at Rs 13bn/Rs 3.5bn by FY31E, anticipating further nominations.”
businesstoday.in
“Valuations exaggerate the core emissions risk while overlooking growth from light-weighting, exports, acquisitions and emerging potential inorganic opportunities.”
businesstoday.in
Sources
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