Angel Broking Views on Smallcap Autos - Automotive Axles, Subros

AUTOMOTIVE AXLES

The company enjoys superior valuation compared to its peers as it has been consistently achieving high levels of profitability. Given the good long-term growth opportunities, impressive clientele, high-end product portfolio and sustained high OPM of over 14%, Automotive Axles, which caters to the commercial vehicle (CV) segment is a good long term investment pick. Though overall CV industry is under cyclical pressure, in long run the MAV (Multi Axle Vehicle), sub-segment is particularly on high growth trajectory and is fast substituting the MCV (Medium Commercial Vehicle) segment. MAV growth is being driven by better cost economics. MAVs are more profitable than the ICVs and MCVs due to which the truck operators are shifting over to MAVs. Automotive Axles, by far the largest supplier (vis-a-vis competition) of tandom drive axles for the 6X4 MAVs, is expected to be one of the biggest beneficiaries of this structural shift to MAVs.

Subros

Subros prospects are derived largely from demand arising in the Passenger Vehicle (PV) segment, which is currently under pressure due to sluggish demand. This is reflected in Subros valuation too. However, newer growth opportunities are emerging for Subros, owing to increasing customer base on the back of investments by new OEMs entering Indian market. Subros is the market leader in the supply of AC systems to the Automobile OEMs with more than 40% market share. Further with the advent of Tata Nano the market is moving towards producing low-cost high-quality automobiles. As the company enjoys an edge over its peers on back of its strong Order book and technological backing from its two foreign collaborators viz. Denso and Suzuki, the company is all set to grab this opportunity. We estimate Subros to register an EPS of Rs 5.2 in FY2009E and Rs 6.4 in FY2010E.

Angel Broking Views on Subros, TV Today, Lanco Infratech

Subros - Target of Rs 42

Angel Broking has recommended a buy rating on Subros with 12-month price target of Rs 42, in its report dated September 12, 2008.

"Subros is the market leader in the supply of AC systems to the Automobile OEMs. The company enjoys an edge over its peers owing to its strong Order book and technological backing from its two foreign collaborators. We estimate Subros to register an EPS of Rs 5.2 in FY2009E and Rs 6.4 in FY2010E. At the CMP, the stock is trading at 5.8x FY2009E and 4.7x FY2010E EPS. We maintain a Buy on the stock, with a Target Price of Rs 42", says Angel broking report.

TV Today - Target of Rs 117

Angel Broking has recommended a buy rating on TV Today Network with a target of Rs 117 in its September 12, 2008 research report. "TV Today Network (TVTN), a focused News broadcaster with a strong bouquet of four news channels, has maintained its leadership in the News Genre over seven consecutive years. Revamped Headlines Today, merger of Radio Today, flow of subscription Revenues and new channel launches would be the key drivers affecting the TVTN stock performance in the ensuing quarters. At the CMP of Rs 91, TVTN is trading at attractive valuations of 8.5x FY2010E Earnings making it the cheapest stock in the Broadcasting space. Moreover, we believe the company's recent buyback announcement would lend downside support to the stock. We Initiate Coverage on the stock, with a buy recommendation and target price of Rs 117," says Angel Broking's report.

Lanco Infratech - Target of Rs 413

Angel Broking has initiated a buy rating on Lanco Infratech with a target of Rs 413 in its September 12, 2008 research report. "We estimate Lanco's Top-line to grow at a CAGR of 95% over FY2008-10E, while Margins are expected to stablise at 16.0% levels by FY2010E. Bottom-line is estimated to post a CAGR of 47% in the mentioned period. At Rs 291, the stock is trading at attractive valuations. We have arrived at a SOTP Target Price of Rs 413 valuing Lanco's core C&EPC business at Rs 175 (9 x FY2010E EPS), Power business at Rs 175 (on DCFE and/or P/BV basis), BOT business at Rs 14 (on DCFE basis) and Real Estate arm at Rs 49 (on NAV basis). We Initiate Coverage on the stock, with a Buy recommendation," says Angel Broking’s research report.