Buy CIE Automotive India; target of Rs 576: Geojit
Geojit is bullish on CIE Automotive India has recommended buy rating on the stock with a target price of Rs 576 in its research report dated August 18, 2023.
Geojit’s research report on CIE Automotive India
CIE Automotive India Ltd. (CIE) is the part of Spain -based, top global forging player with a strong presence in both Europe & India. Currently, 60%of the revenue comes from India, while the rest is from Europe. We believe the current growth story in the domestic market and the focus on building the EV product portfolio and operation performance in the European business are likely to push the margin forward. Despite lower sales due to higher pass-through to customers for Q2, CIE’s consolidated margin expanded by 217bps on the back of benign metal prices and cost control initiatives by discontinuing German operations. Though the current order will suffice for the required growth in the near term. However, Global macro turbulence could delay capacity expansion from Major OEM. Increased business with existing customers owing to supplier consolidation, localization and shifting production to India as the primary hub for export is adding value for the company. We expect a re-rating in valuation similar to listed MNCs in the automotive sector and recommend BUY rating at CMP (21x CY24E EPS).
Outlook
We expect normal growth in the domestic car segment for the year due to a high base and fading pent-up demand. In addition, there is the possibility of a tightening in the International business in the near term. However, the long-term growth prospects are intact, and we expect a re-rating in valuation similar to listed MNCs in the automotive sector. We value CIE at 21x CY24E EPS and recommend a buy rating with a target price of Rs. 576.
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CIE Automotive India – 16 -08 – 2023 – geo
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