 "Tube Investments")
Shares of Tube Investments of India (TII) hit a new high of Rs 3,394, as they rallied 5 per cent on the BSE in Friday’s intra-day trade in an otherwise weak market on healthy business outlook.
The stock of auto components & equipments company was trading higher for the fourth straight day, surging 14 per cent during the period. In past two months, it has soared 33 per cent. In comparison, the S&P BSE Sensex was down 0.51 per cent at 62,913 at 09:38 AM.
TII, the flagship company of the Murugappa Group, is one of India’s leading manufacturers of a wide range of precision engineered and metal formed products for major industries such as Automotive, Railway, Construction, Mining, Agriculture, etc. The company is also a leading manufacturer of bicycles in India, with a range of iconic brands and a strong market presence. The acquisition of CG Power and Industrial Solutions, a major manufacturer of Motors, Transformers, Switch Gears and Railway parts, marked a major step-up for the company, amplifying its scale and scope of operations.
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TII offers a robust growth story, driven by reasonable growth in the core business and by leveraging strong cash flows of the core business (TI-1) to systematically incubate future growth platforms (TI-2) and opportunistic acquisitions of stressed assets (TI-3) at attractive prices, Motilal Oswal Financial Services (MOFSL) said.
TI-1 offers diversified revenue streams, with strong growth in the core business (~22 per cent S/A PAT CAGR over FY23-25E), a ramp-up in CG Power, and optionality of new businesses incubated under the TI-2 strategy. The stock trades at 40x/32.7x FY24E/FY25E consol. EPS, the brokerage firm said in stock update.
It maintains BUY rating and a Target Price of Rs 3,560 (premised on Jun'25E SOTP, based on 35x for the standalone business, valuing listed subsidiaries at 20 per cent HoldCo discount and Rs 280 for two EV businesses).
