GNA Axles surges 25% in two days on strong Q1 results

The company posted consolidated net profit of Rs 29.46 crore as against a loss of Rs 6.58 crore in the year-ago quarter on the back of a healthy operational performance

Shares of GNA Axles moved higher by 18 per cent to Rs 652.95 on the BSE in the intra-day trade on Tuesday, surging 25 per cent in two trading days, after the auto components' company reported a strong set of numbers for the quarter ended June 2021 (Q1FY22).

The company posted a consolidated net profit of Rs 29.46 crore in Q1FY22 as against a loss of Rs 6.58 crore in the year-ago quarter on the back of a healthy operational performance. It had posted a net profit of Rs 27.63 crore in the March quarter (Q4FY21).

Moreover, revenues from operations in the quarter under study jumped four-fold year on year (YoY) at Rs 328.96 crore from Rs 81.33 crore in Q1FY21. Ebitda (earnings before interest, taxes, depreciation, and amortization) margins improved 935 basis points (bps) YoY at 16.71 per cent from 7.35 per cent. Ebitda margin stood at 15.77 per cent in Q4FY21.

GNA Axles reported a record-high Q1FY22 performance, led by market share gains in the domestic market and robust exports (strong demand from North America, followed by South America and Europe).

Edelweiss Securities expects valuation re-rating in GNA Axles owing to expectations of strong pickup in the domestic commercial vehicle (CV) business in H2FY22, healthy momentum in the export business, and increased wallet share with key international customers, which is expected to significantly improve the company’s financials.

"We believe GNA will surpass industry growth in the upcoming cycle due to strong heavy truck demand from North America and Europe, market share gains in the export business, and expected revival in the domestic CV industry along with some market share gains. While rise in input cost is a concern, benefits of operating leverage and aggressive cost management should help restrict the sharp deterioration in margins," the brokerage firm said in a result update. The stock has already achieved brokerage target price of Rs 645 in the intra-day trade today.

At 11:41 am, the stock was trading 16 per cent higher at Rs 640 on the BSE, as compared to a 0.03 per cent decline in the S&P BSE Sensex. Trading volumes on the counter jumped over three-fold with as a combined 2.08 million shares had changed hands on the NSE and BSE till the time of writing of this report.