Rane Brake Lining Initiating Coverage Report By Angel Broking

RBL’s revenues are estimated to grow at 12% CAGR over the next two years. Upsurge in OEM volumes coupled with focus on the aftermarket segment would drive the top-line. Also, the company’s margins are expected to improve on account of operating leverage, enhanced local procurement and energy savings. Given the healthy top-line growth and margin improvement, RBL’s earnings are likely to grow at a CAGR of 17% over FY2015-2017. Its return ratios are also estimated to expand due to margin improvement and reduction in leverage. We initiate coverage on RBL with a Buy recommendation and target price of `336 (based on 12x FY2017 earnings).

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