Hold Atul Auto; target of Rs 360: ICICI Direct

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ICICI Direct's research report on Atul Auto

Atul Auto (AAL) is a prominent 3-W manufacturer based out of Gujarat with a broad-based presence across segments and fuel types. It has a production capacity of 1.2 lakh units with FY22 sales volume at ~16,000 units. Fourth largest 3-W player with FY22 domestic market share at 5.5% (9.0% in cargo segment and 4.1% in passenger segment).

Outlook

Given slower than expected recovery in 3-W space, delay in electric 3-W launch at AAL and recent run up in stock price, we downgrade AAL from BUY to HOLD and await EV launch & volume ramp up before turning positive. Introducing FY25E and rolling over our valuations, we now value AAL at a revised target price of Rs 360 i.e. 24x P/E on FY24E-25E average PAT of core auto business and 2x P/BV to investment in subsidiaries.

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Atul Auto - 21 -01-2023 - icici