Atul Auto Is A Gem On Three Wheels: Centrum Research Report

The GEM on three wheels

We initiate coverage on Atul Auto (Atul), the fastest growing three-wheeler company, with a BUY and TP of Rs640. Atul should enjoy continued market share gains in the domestic 3W market driven by wider distribution reach and entry into the petrol segment, which accounts for 1/3rd of the total domestic industry. Further, entry into the petrol segment opens up huge export opportunity as addressable global markets are largely petrol based. Valuations appear compelling, considering 28% earnings CAGR over FY14-FY16E, superior return ratios, healthy dividend payout and debt free status despite a large planned expansion.

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