PPAP Automotive - Margin Recovery Holds Key, Wait Gets Longer: ICICI Direct

Over the past five years, PPAP’s stock price is down substantially, vastly underperforming Nifty Auto Index.

<div class="paragraphs"><p>A workers holds an automobile part at a plant. (Source: freepik)</p></div>
A workers holds an automobile part at a plant. (Source: freepik)

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. 

ICICI Direct Report

PPAP Automotive Ltd. is a passenger vehicle-focused ancillary manufacturing automotive body sealing parts and various interior and exterior plastic moulded parts.

PV segment forms bulk of sales at ~90% with two-wheeler and commercial vehicle comprising the rest. It counts Maruti Suzuki India Ltd. as its anchor client, with share in revenues at ~50%.

Key triggers for future price performance:

  • With fundamental levers in place for double digit volume growth in domestic PV space over FY22-25E, market share gain ambition at Maruti Suzuki, new initiatives at PPAP Automotive, we build in 17.4% sales compound annual growth rate in FY22-25.

  • With raw material prices on decline (crude led), negotiations underway with key clients for raw material related product price adjustments and operating leverage benefits at play, we bake in 11% operating margins by FY25E.

  • Profit after tax is expected to substantially improve amid margin recovery as well as trimming of losses at joint venture. Profit after tax is seen at Rs 23 crore by FY25E.

Click on the attachment to read the full report:

ICICI Direct PPAP Automotive Company Update.pdf
Automobiles Sector Check - Steady YoY Growth Continues: Reliance Securities


This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.