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Motilal Oswal Repor
We recently met with the management of CIE Automotive India Ltd., and following are the key takeaways from the discussion.
The domestic market is experiencing a weak demand phase in the tractor and passenger vehicle segments, while two-wheeler continues to perform relatively well. The global auto market, particularly in Europe, remains sluggish.
The EV transition in India continues to evolve as a growth opportunity, given the healthy new order wins. Additionally, the risk of EV transition in Europe remains mitigated, given that:
most European OEMs are now reconsidering their EV transition deadlines and
hybrids are likely to gain traction in Europe, which augurs well for CIE Automotive.
However, the management remains committed to focusing on:
outperforming the core domestic industry growth in the long run;
further improving operational efficiencies in India; and
revising costs in Europe to the new normal.
Given its focus on operational efficiencies, CIE Automotive has evolved into a highly resilient company. Some of the financial attributes unique to the global ancillary player include: being net debt free, having strict capex/inorganic expansion guidelines, generating positive free cash flow, and tracking an improving return trajectory.
We reiterate Buy with a target price of Rs 650 (based on ~21 times Sep'26E consolidated earnings per share).
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