Quick take Report on Competent Automobiles with a Buy recommendation and Target price Rs.115 (12 months).
Competent Automobiles (Competent) is mainly in the
business of trading and servicing of Maruti Suzuki (MSIL) vehicles.
Presently the company has its presence as a dealer of Maruti Suzuki
India Ltd. in Delhi, Haryana and Himachal Pradesh. The company has 5
showrooms and 3 workshops in Delhi, 2 showrooms and a workshop in
Haryana and 2 showrooms and 2 workshops in Himachal Pradesh (HP) as of
March, 2014. We believe that Competent will continue to benefit from its
established position in the automobile dealership market in Delhi,
Haryana, and HP, and its conducive
relationship with its principal, MSIL. During FY2014-16E, we expect the
company to register a top-line and bottom-line CAGR of 9.9% and 24.3%,
to `977cr and `14cr, respectively. At the current market price of `91, the stock is quoting at 5.6x and at 4x its FY2015E and FY2016E EPS, respectively, which we believe is attractive. We recommend a Buy rating on the stock with a target price of `115, valuing the stock at 5x FY2016E earnings giving an upside potential of 27% from 12 months perspective.
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