Buy Atul Auto Ltd., target Rs 577.0 : Motilal Oswal Securities

Motilal Oswal Securities has Buy call on Atul Auto Ltd. with a target price of Rs 577.0. The current market price of Atul Auto Ltd. is 409.9. Time period given by analyst is year, when Atul Auto Ltd. price can reach defined target. Atul Auto plans to add 25-30 dealers p.a. and 10-15 overseas dealers in the next 2-3 years. This should aid a ∼8-10 % volume growth p.a. The company sees further scope for improvement in sales per dealer as the economy revives. Motilal Oswal expects Atul Auto to outstrip industry growth and improve its market share over the next few years. The brokerage cut our PAT estimates 8 %/12 % for FY17E/FY18E; expect revenues and earnings to grow by 16 % and 17 % CAGR respectively over FY16-FY18E. Atul Auto stands to gain from a rural economy revival as its current focus is on non-metro markets.