TUBE INVESTMENTS OF INDIA
RESEARCH: UBS
RATING: BUY
CMP: 138
UBS reiterates `Buy’ rating on Tube Investments of India (TIL) with a price target of 197. TII reported PAT of Rs51.9 crore and a pre-exceptional PAT of 31.3 crore; led by strong revenue growth of 28% Yo-Y and EBITDA margin improvement of 40bps Q-o-Q to 11.5%. The cycles and engineering business, too, registered strong revenue growth of 25% and 28%, but margins were impacted by higher steel prices and declined 20-60 bps sequentially. However, the company remains confident about maintaining margins in future. The company plans to launch a new e-scooter model in Q4 with better features in the lower price scooter range with potentially higher demand. The company also has significant long-term expansion plans in its tubes, bicycles and chain businesses requiring an investment of 250 crore. The target price of 197 includes 106 for TIL’s investments in Cholamandalam and Mitsui JV for general insurance at 50% holding company discount.