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Wabco India Q3 Review - Best Placed To Play The CV Upcycle: ICICI Securities

Wabco India Q3 Review - Best Placed To Play The CV Upcycle: ICICI Securities

<div class="paragraphs"><p>An automobile combustion engine, suspension unit and front brake disc sit on a hydraulic platfrom on the engine and body wedding line. (Photographer: Krisztian Bocsi/Bloomberg)</p></div>
An automobile combustion engine, suspension unit and front brake disc sit on a hydraulic platfrom on the engine and body wedding line. (Photographer: Krisztian Bocsi/Bloomberg)

BQ Blue’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 BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

ICICI Securities Report

Wabco India Ltd.’s Q3 FY22 Ebitda margin declined 120 basis points QoQ to 9% primarily led by 150 bps decline in gross margin.

Revenues grew ~6% QoQ not cushioning Ebitda margins through superior operating leverage. Following commentary by other auto players, we believe, we are close to peak of raw material cost inflationary pressures for Wabco India too.

We like the company’s underlying fundamentals on:

  1. dominant market share (more than 85%) in domestic medium and heavy commercial vehicle industry, and thus see it as a clear beneficiary of the impending multi-year growth cycle;

  2. strong export opportunities from both existing customers and parent ZF Group; and

  3. best-in class technology leadership (from parent ZF Group), which will likely accelerate new product introduction (e.g. electronic stability control, air disc brakes, services).

Click on the attachment to read the full report:

ICICI Securities Wabco India Q3FY22 Results Update.pdf

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