CIE Automotive shares: Here's why brokerages remain positive after muted quarterly results

CIE Automotive India Ltd extended its falls on Wednesday after the company reported a muted set of numbers in the December 2023 quarter. However, domestic brokerage firms continue to remain positive on CIE Automotive even as the auto anciliary player missed the analysts' estimates in the quarter.

CIE Automotive India, which declared their Q4CY23 results on Monday, February 19, 2024, reported a 198 per cent rise in the topline, while its net profit came in at Rs 168.94 crore. The company had reported a net loss of Rs 657.85 crore in the same period previous fiscal year. Operating profit of the company came in at Rs 327 crore, with an operating profit margin of 16 per cent.

CIE Auto reported a weak set of numbers. Q4CY23 consolidated revenue, Ebitda and PAT were below the estimates, said Axis Securities. The company missed both our internal and consensus revenue estimates primarily due to a slowdown in the EU market, a decline in the US off-highway market, as well as decreased demand in the MHCV/Tractor segments in India, it said.

Shares of CIE Automotive India dropped about 3 per cent to Rs 461 on Wednesday, commanding a total market capitalization of more than Rs 17,500 crore. The scrip had settled at Rs 472.55 in the previous trading session on Tuesday, down another 2 per cent for the day.

The management indicated that the company will continue to outperform overall industry growth by over 5 per cent in India and European business to gradually grow in line with industry growth. It maintained long-term EBITDA margin guidance at 17-18 per cent. It believes in greater business opportunities in India and Mexico than in a stagnant EU market, Axis added.

"We like CIE Automotive based on its strong execution capabilities and reiterate our 'buy' rating on the company at a 1-year Forward PE multiple of 24 times on Indian operations and 10 times on moderate European operational earnings for CY25 EPS," it said. However, Axis Securities has trimmed its target price to Rs 565 from Rs 585 earlier.

Shares of CIE Automotive India have dropped more than 20 per cent from its 52-week high at Rs 578.10. The stock has remained flat in the last five year period, while its down 10 per cent in the last six months.

CIE Automotive's growth story is on track, driven by its organic initiatives. Moreover, cost-cutting measures in both India and the EU and a recovery in domestic 2W demand will drive margin expansion going forward. However, the company is seeing a temporary slowdown due to weakness in the underlying light-vehicle market in EU and US off-highway markets, said Motilal Oswal.

"We believe CIE Automotive's focus on profitability and increasing contribution of EVs in the overall business through execution of new orders can drive a re-rating. The stock trades at 18.5x/15.8x CY24E/CY25E consolidated EPS," it said while reiterating the 'buy' tag with a target price of Rs 540.


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