Autocorp is a bigger play on transportation and to a lesser extent on auto ancillary segment. Its bus coach manufacturing division did well even in tough macroeconomic environment; buy.

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STOCK INFO
BSE 505036
NSE AUTOCORP
Bloomberg ACGL@IN
Reuters ATOG.BO
Sector AUTO ANCILLIARIES
Face Value (Rs) 10
Equity Capital (Rs mn) 64
Mkt Cap (Rs mn) 2,569
52w H/L (Rs) 408.80/154.80
1m Avg Daily Volume (BSE+NSE) 28,237
SHAREHOLDING PATTERN %
(as on 31st Mar. 2014)
Promoters 53.50
FIIs 0.02
DIIs 0.03
Public & Others 46.45
Source: BSE, NSE India, Capitaline, Company, IndiaNivesh Research
STOCK PERFORMANCE (%) 1m 3m 12m
AUTOCORP 50 71 90
SENSEX 7 16 34
Source: BSE, NSE India, Capitaline, Company, IndiaNivesh Research
Nivesh Discovery
June 16, 2014
CMP : Rs.400
Rating : BUY
Target : Rs.549
Rating : NR
Target : NR
Current Previous
(NR-Not Rated)
Dharmesh Kant
AVP - Strategies & Fund Manager (PMS)
Mobile: +91 77383 93372
Tel: +91 22 66188890
dharmeshh.kant@indianivesh.in
Automobile Corporation of
Goa Limited
Automobile Corporation of
Goa Limited
Source: BSE, NSE India, Capitaline, Company, IndiaNivesh Research
Automobile Corporation of Goa Limited (AUTOCORP) is an engineering company set up in
Goa jointly promoted by Tata Motors Ltd and EDC Ltd. The company was established in
1982 manufacturing bus coaches, sheet metal components and assemblies. It operates on
‘Just in Time’ model for the supplies to its customers. Has technical collaboration with Fuji
Heavy Industries Ltd. of Japan, makers of Subaru car for various models of chassis mounted
bus bodies and Monocoque buses. The company is listed on Bombay Stock Exchange.
Key rationales for accumulating AUTOCORP:
1) AUTOCORP is a bigger play on transportation and to a lesser extent on auto ancillary
segment. Its bus coach manufacturing division did well even in tough macroeconomic
environment. Asroadconnectivityacrossthelengthandbreadthofcountryincreases
demand for better and superior quality of buses will grow faster. The same was
reflected in its FY’14 numbers where its bus body building division produced and sold
3,523 buses higher than 2,941 buses in FY’13 representing a growth of 20% in bus
orders.
2) Bus body building division having completed 25 years of operation contributes
around 85% to total revenue. In FY’14 it clocked revenue of Rs 266.77 crores at EBIT
marginof6.50%.TataMotorsLtd.beingitsbiggestcustomerisalsothemainpromoter
holding around 46.44% of issued and subscribed share capital as on 31st
March’14.
Going forward we expect higher and sustained growth in bus body building division
as replacement demand of existing operational fleet to better, comfortable, safer,
environment friendly and fuel efficient buses picks up and better road connectivity
reaching to untapped destinations will generate demand for new buses to meet
passenger transportation requirement.
3) Pressing segment has been impacted by continuity of recessionary environment and
deceleration in commercial vehicle segment. Capacities remained underutilized
throughout FY’14, the division’s turnover dropped to Rs 48.63 crores from Rs 59.51
crores in FY’13, a decline of 19%. We expect things to improve in FY’15 and FY’16 as
economy shows signs of resilience and pick up. In FY’14 this division contributed 15%
to total turnover down from 23% in FY’13 and 25% in FY’12.
4) Thecompanystandsonastrongbalancesheet.AUTOCORPisanetdebtfreecompany.
In FY’14 it delivered total revenue of around Rs 311 crores, operating profit margin at
10.26%, net profit margin near of 5.62% and dividend yield of 3.13%.
5) The stock is currently available at Mcap to sales of 0.83x, P/E multiple of 14.69x (TTM
basis) and P/BV of 1.5x (TTM basis) at current market price of Rs 400.
6) In a decelerating economy, Autocorp managed well to deliver 15% revenue growth
in FY’14. We expect economy to recover and return to growth path in FY’15. The
company has potential and manufacturing capacities to deliver over 20% of an
annualized growth which is likely if their bus body building division continues with
current run rate of growth and pressing division returns back to FY’13 levels.
7) Assuming in FY’15 both divisions of Autocorp delivers resulting into revenue growth
by of 20% y-o-y while net profit margin stands at 6.43% (same as of Q4FY14), the EPS
works out to be Rs 37.37. Valuing the company current P/E multiple of 14.70x for
FY’15 on aforesaid assumption the stock target price comes to Rs 549.
We recommend buy and accumulate on AUTOCORP for a target price of Rs 549.
YE March (Rs. Crores) REVENUE EBITDA PAT EBITDA % PAT % EPS (Rs.) P/E (x)
FY12A 341.09 41.67 28.84 12.22% 8.46% 38.66 10.35x
FY13A 271.92 28.88 15.63 10.62% 5.75% 24.35 16.43x
FY14A 311.07 32.19 17.48 10.34% 5.62% 27.22 14.69x
Source: BSE, NSE India, Capitaline, Company, IndiaNivesh Research

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Automobile Corporation of Goa Limited (contd...)
June 16, 2014 | 2Nivesh Discovery
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