ICICI Direct's research report on Automotive Axles
Established in 1981, Automotive Axles (AAL) is largest independent manufacturer of rear axle drive assemblies in India (primarily for CVs; M&HCV). As of FY20, rear drive axles comprise ~60% of its topline with brakes share at ~20% and other parts comprising the rest • Counts all major OEMs as its clients in the CV domain with prominent names being Ashok Leyland, VECV Commercial Vehicles, M&M among others.
Outlook
Retain BUY given cyclical recovery in CV space (M&HCV domain) with AAL a key beneficiary and the company making tangible efforts on diversification of its client base (targeting construction equipment, defence space). Upgrading our estimates, we now value the company at a revised target price of Rs 2,375 i.e. 20x P/E on FY24E EPS (earlier TP Rs 2,140).
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