GNA Axles IPO opens tomorrow as the 19th public offer this year in India. The Jalandhar-based rear axle manufacturer for agricultural and commercial vehicles is looking to raise INR130 crore (INR1.3 billion) through the IPO by selling 6,300,000 shares in the price band of INR205 – 207 apiece. GNA Axles IPO broker recommendations are mostly positive although high dependence on certain clients has been cited as a concern in some research notes. Here is a snapshot of what broker recommendations are about GNA Axles IPO.
Analysts at Angel Broking note that strong recovery in tractor segment will drive growth for GNA Axles while also noting the consistent operating margin improvement at the company. “GNAAL has a better margin and ROE profile than its comparable peers. Considering high export revenue composition, expected recovery in domestic sales and the company’s market leadership position in the tractor segment; plus, given the relatively attractive valuation proposition, we recommend a SUBSCRIBE on the issue,” said the research house in its recommendation on GNA Axles IPO.
Similar positivity on the margin front was expressed by Nirmal Bang in its research note which recommends investors to SUBSCRIBE for listing gains and long term gains. “Going forward, with strong customer base and growth in the user industry margins will improve further. On the valuation front, at the given upper price band of issue of Rs. 207, GNA is offered at P/E of 17.1x (FY16) it’s diluted EPS which we believe is reasonably priced in comparison to its peers. We recommend subscribing to the issue for listing as well as long term gains,” said the brokerage house’s report.
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Ventura Securities has also put a SUBSCRIBE rating on GNA Axles IPO, noting bright prospects for the company. “At its upper band price of Rs 207, stock is trading at 12.1x of its current FY16 EPS of Rs 17.1. We recommend SUBSCRIBE on the issue for listing gains. Investors with holding capacity could also hold for long term gains since the auto industry is expected to flourish in the coming two years on the back of above average monsoons and renewed demand. Being a major supplier to both passenger and commercial vehicle segments, we are optimistic on the prospects of GNA Axles,” mentioned Ventura’s report.
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Analyst view at GEPL Capital is also positive as its report reads, “GNA Axles Ltd. stands to gain from operating leverage and also rise in the on on-highway side and off-highway side business. At a P/E of 12.1x we believe that GAL a discount to its domestic peers. We assign a Subscribe rating to the IPO.”
Analyst view for GNA Axles is also positive at KR Choksey which suggests investors to SUBSCRIBE to the IPO for long term. “At price band of (INR ~205- INR 207) the GNA offer comes at a PE of 16.92x and 17.02x respectively on FY 16 diluted EPS of INR 12.11, which is fairly priced to its nearest peer (Talbros Automotive Components Ltd ~17.53x), given the improving export share, revival in domestic demand and implementation of BS norms, we advise investors to subscribe the IPO and remain invested in GNA’s long term story,” said the brokerage report adding to the positive broker recommendations.
Arihant Capital Markets has given GNA Axles IPO a 2 star rating out of maximum 5 while highlighting high dependence on certain clients. “The issue has been offered in a price band of Rs 205-207 per equity share. At the upper price band of Rs 207 the stock is available at P/E and P/B of 12.1(x) and 2.3(x) based on FY16 financials. The issue looks fairly valued against its competitor. We have 2 star rating for the issue,” said its research note.
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