Positional Call: Buy PPAP Automotive for an upside of 23%

Rudra Shares And Stock Brokers | Dec. 3, 2018, 12:36 p.m.

Valuation

PPAP to continue reporting ahead of industry revenues & PAT growth with steady margin performance led by improving product mix, growing wallet share with OEMs, strong product development pipeline (23 products) for Hyundai & MG Motors over next 24 months. However, company remain cautious on overall PV demand in the near to medium term caused by rising crude oil prices, liquidity crunch, currency volatility, high interest rate regime and RM cost headwinds coupled with client concentration risk as MSIL and Hyundai contributing 80% of revenues. Acknowledging vigorous performance, 64% promoter holding, strong customer base, and low equity base, we recommend Buy with a target of Rs. 462, which corresponds to 16x P/E.



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