- Q4FY26 consolidated EBITDA broadly in line with estimates
- Exports to fuel auto growth
- Defence/Aerospace to drive Industrials
- Defence growth to be led by a pending order book of INR109.6bn
- Restructuring of German steel forgings to aid earnings growth
- Trimmed FY27E EBITDA by ~5% due to delay in execution of ATAGS/carbine orders
- Raised FY28E EBITDA by ~2% on restructuring of German forging operations
- Revenue/EBITDA CAGR of ~11%/19% expected over FY26–28E, led by execution of defence orders, growth in core segments and AAM acquisition
- Expects FY28E consolidated EPS accretion of 15%
“We are building in revenue/EBITDA CAGR of 11%/19% over FY26–28E, led by execution of defence orders, growth in core segments (CV, PV, construction equipment) and AAM acquisition. However, valuation comfort is missing, as the stock trades at 29x/24x FY27E/28E EV/EBITDA, post 20% stock price run-up in past month. Downgrade to ‘REDUCE’ (earlier ‘HOLD’) with a TP of INR1,650 (from INR1,620), based on 35x/15x FY28E EV/EBITDA for defence/other businesses,” the brokerage noted.
