Broker's call: GNA Axles (Accumulate)

| Updated on January 12, 2021 Published on January 12, 2021

IDBI Capital

GNA Axles (Accumulate)

Target: ₹388

CMP: ₹378.45

GNA Axles (GNA) Q3-FY21 results were above our estimates on revenue and EBITDA level whereas EBITDA margin was below our estimates due to higher raw material cost and employee expenses.

Revenue for the quarter stood at ₹280 crore, above our estimates, on account of strong orders from Meritor and domestic tractor players. We believe NA/SA/ European market has seen strong recovery post June 20. We expect domestic M&HCV truck market to perform relatively better in H2FY21 on account of economic growth recovery, higher road/construction activities and nearly 15 per cent growth for tractor industry for FY21.

We anticipate a revenue decline of 8 per cent for FY21 due to weaker Q1, stable Q2 and strong recovery in Q3/Q4. We revise our revenue/PAT estimates upwards by 6 per cent/14 per cent for FY22 and 4 per cent/8 per cent for FY23, respectively, on account of strong recovery in NA truck market and domestic truck/ tractor market with EBITDA margin of approximately 15.5 per cent.

Due to recent rise in share price, we downgrade our recommendation to Accumulate and change our TP to ₹388 (earlier ₹295).

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Published on January 12, 2021
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