WABCO India Ltd. has given a 133% return on a year on year basis as the Auto Ancillary Stocks have rallied on recovery of the Auto sales in the current financial year 2014-15. We had recommended the stock at Rs.1735 per share and the current market price of the stock is at Rs.3802 per share.
WABCO India Ltd. is a subsidiary of WABCO Holdings Inc. a company in USA that has pioneered the manufacture of air assisted and air brake systems for commercial vehicles in India. The company has a product portfolio in three categories, Conventional Products, Advanced Braking System and Driveline controls. The Conventional products include Automatic Slack Adjusters, Actuators, Brake Chambers, Valves, Drying and Distribution Unit and Air Compressors. Advanced Braking System includes Electronically Controlled Air Suspension, Electronic Braking System, Antilock Braking System (ABS) and Lift Axle Control Valve. Driveline controls includes Clutch Control, Integrated Pedal Unit and Optidrive as the products.
WABCO India has four manufacturing facilities with two of them located in Chennai, one in Jamshedpur and Pantnagar in Uttarakhand. WABCO India is the first Indian company to win the prestigious Deming Prize for excellence in Quality of products. The ABS has had a positive impact on the revenues of the company since its launch in the year 2000 for Commercial Vehicles in India. The product profile of the company is technology intensive with minimum competitive intensity. The company has a market share of 85% in the supply of related products in the Commercial Vehicle segment of the Automobile Industry. The company supplies to the OEMs for use of products in the automobiles and also supplies products in the aftermarket business segment. The aftermarket business segment contributes 18% to the revenues of the company. WABCO INDIA has a long established aftermarket service network that offers broad access to WABCO original parts, repair, expertise, diagnostics and services for customers and has more than 7000 outlets and 250 service stations with 80% of the National Aftermarket business channelled through independent distribution partners.
The Company reported Sales of Rs.9,659 million with an EBITDA of Rs.1941 million and a net profit of Rs.1308 million in FY 2012-13. The EBITDA margin was 20.1% and the net profit margin was 13.54%. The company reported a net profit of Rs.291.1 million with revenues of Rs.2726 million for the quarter ended September 2013. The Earnings per share was reported at Rs.69 and the Return on Capital Employed (RoCE) was reported at 21.8% and the Return on Equity at 22.2% for FY 2012-13. The company has shown a CAGR of 12.45% in revenues and the net profit has grown at a CAGR of 13.37% from FY 2008 to FY 2013. The EBITDA margin and the Net Profit margin is high in comparison to the industry average due to the higher market share enjoyed by the company with very little competition from other players. The company faces less intensity in competition due to advanced technological capabilities. The company has higher margins in the aftermarket business segment compared to the business derived from supply to OEMs.
The company had zero debt at the end of Q2FY14 with current market capitalization of Rs.32,738 million and Enterprise Value of Rs.29,943 million with a Price to Earnings multiple of 25.20 at Rs.1738 per share. The Price to Book Value is Rs.5.08 and the Market Capitalization to Sales ratio is 3.38. WABCO India had last declared a dividend of 100.00% of Rs.5 per share for the year ended March 2013. The Promoters have a shareholding of 75% and the FIIs have a shareholding of 2.5% in the company.
Exports contribute 19% to the revenues of the company. The company mainly exports to its parent company in North America and to Europe. Exports have witnessed a 54% CAGR over FY09-FY13, as the parent company has decided to make WABCO India Ltd. as its export hub. WIL has set up an EOU (export-oriented unit) at Mahindra World City, specifically dedicated to cater to the needs of the parent company. Exports witnessed a strong growth of 34% in FY13 at Rs.2 billion on a year on year basis.
