Automotive Axles Q4 Results Review - Short-Term Pain, Long-Term Gain: Axis Securities

Axis Securities Report

Automotive Axles Ltd. posted weaker than expected revenue/Ebitda/profit after tax. Revenue was down 18% YoY but up 6%QoQ, (6% Miss) versus medium and heavy commercial vehicle industry production volume which were flat YoY and grew 15% QoQ. This lower-than-industry QoQ growth was mainly due to lower product presence in the 9 Mt Bus Segment which witnessed high volume growth.

Ebitda at ~Rs 64 crore was down 18% YoY but up 10% QoQ (5% Miss) on account of lower gross margins. Ebitda margins stood flat at 11.1%. Profit after tax was reported at Rs 44 crore, down 13% YoY but up 13% QoQ (Inline), largely on account of higher non-operating income.

Key Risks to our estimates and target price

1. Higher than expected MHCV volume uptake by fleet operators/replacement demand.

2. Macroeconomic headwinds

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