Edelweiss is bullish on Schaeffler India has recommended buy rating on the stock with a target price of Rs 5851 in its research report dated April 18, 2018.
Edelweiss' research report on Schaeffler India
Schaeffler India’s (Schaeffler) Q1CY18 sales grew 13% YoY (in line with estimate) led by strong rebound in industrial (up ~14% YoY) and spurt in automotive OEM (up ~26% YoY) segments. Distribution segment (~30% of sales) clocked strong double digit growth. Overall EBITDA margin contracted 145bps YoY due to higher raw material cost and dip in share of exports, leading to mere ~4.5% EDITDA growth. We believe, Schaeffler is well placed to gain from the structural and cyclical uptick in both industrial and automotive segments.
Outlook
We maintain ‘BUY’ with TP of INR5,851 (valued at 28x CY19E). Due to impending merger approvals, we have not considered financials as a combined entity. At CMP, the stock trades at 31.0x CY18E EPS and 25.2x CY19E EPS.For all recommendations report, click here
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