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Motilal Oswal Report
Tube Investments of India Ltd. offers a robust growth story, driven by reasonable growth in the core business and by leveraging strong cash flows of the core business (TI-1) to systematically incubate future growth platforms (TI-2) and opportunistic acquisitions of stressed assets (TI-3) at attractive prices.
TI-1 offers diversified revenue streams, with strong growth in the core business (~22% standalone profit after tax compound annual growth rate over FY23-25E), a ramp-up in CG Power, and optionality of new businesses incubated under the TI-2 strategy.
The stock trades at 40 times/32.7 times FY24E/FY25E consolidated earnings per share.
We maintain our 'Buy' rating and a target price of ~Rs 3,560 (premised on June 25E SOTP, based on 35 times for the standalone business, valuing listed subsidiaries at 20% HoldCo discount and ~Rs 280 for two electric vehicle businesses).
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