Add WABCO India, target price Rs 7860: ICICI Securities

ICICI Securities has add call on WABCO India with a target price of Rs 7860. The current market price of WABCO India Ltd. is Rs 7530.

Time period given by analyst is one year when WABCO India price can reach defined target. WABCO India Ltd., incorporated in the year 2004, is a Mid Cap company (having a market cap of Rs 14064.46 Crore) operating in Auto Ancillaries sector.

Financials
For the quarter ended 30-06-2021, the company reported a Standalone Total Income of Rs 503.81 Crore, down -29.92 % from last quarter Total Income of Rs 718.91 Crore and up 180.88 % from last year same quarter Total Income of Rs 179.37 Crore. Company reported net profit after tax of Rs 21.38 Crore in latest quarter.


Investment Rationale
The brokerage likes Wabco’s business model (dominant market share, improving content/vehicle, multi-year potential M&HCV upcycle, low leverage, strong RoCEs). New capex plans indicate confidence of parent (ZF) in capabilities of Wabco India. It raises earnings for FY22E / FY23E by 2.1% / 3% on the back of better export growth potential. Though the brokerage likes the business, we would seek lower valuations to turn further constructive. It maintains target multiple at 40x FY23E EPS of Rs196.

Promoter/FII Holdings
Promoters held 77 per cent stake in the company as of June 30, 2021, while FIIs held 0.6 per cent, DIIs 13.1 per cent and public and others 8.3 per cent.