ICICI Securities has reiterated its BUY recommendation on CIE Automotive India, setting a 12-month target of Rs 600, implying roughly 20% upside from the current market price of Rs 500.

In a quarter that underscores the durability of India’s domestic automotive cycle, CIE Automotive India has demonstrated accelerating momentum in its core business, steadying European operations, and maintaining a fortress balance sheet. The company closed CY25 with consolidated revenue of Rs 9,406 crore and EBITDA margins of 14.6%, while net profit stood at Rs 828 crore. ICICI Securities sees India-led operating leverage, disciplined capital allocation, and export tailwinds as key drivers for earnings compounding over CY26–27E, justifying its Rs 600 price target.

India Emerges as the Growth Engine

Domestic operations have entered a new acceleration phase. India now contributes 65% of consolidated revenue, with forging accounting for more than half of overall sales. In Q4CY25, India revenue climbed 12% year-on-year to Rs 1,544 crore, marking the strongest quarterly print in the company’s history.

Management highlighted a clear growth trajectory over the past six quarters, with sequential improvement culminating in double-digit expansion. Annualized order wins of approximately Rs 870 crore in CY25 reinforce revenue visibility and indicate that delayed project ramps are now largely behind the company.

The demand mix remains diversified across passenger vehicles (53%), two-wheelers (23%), commercial vehicles (11%) and tractors/off-highway (13%), positioning CIE to capture broad-based sector strength.

Margins: Short-Term Headwinds, Structural Stability

India EBITDA margin in Q4CY25 stood at 16.8%. While marginally lower than the previous year, the decline was influenced by temporary factors — a 30 bps energy tariff hike in Maharashtra and an 80 bps impact from a one-time gratuity provision under the new labour code.

For CY25, consolidated EBITDA margin was 14.6%. On a normalized basis, margins remain resilient. Operating leverage from higher capacity utilization — particularly at Hosur — along with improved product mix toward higher value-added components, is expected to lift profitability in CY26.

The brokerage forecasts EBITDA rising from Rs 1,376 crore in CY25P to Rs 1,751 crore in CY27E.

Europe: Defensive Discipline Amid Structural Weakness

European operations, contributing 35% of sales, remain under pressure. Q4CY25 revenue rose 21% YoY in INR terms, though constant currency growth was just 4%, aided by forex benefits.

EBITDA margin for Europe in Q4 stood at 12.7%, impacted by restructuring costs at the Legazpi plant. Management’s strategy here is defensive: preserve margins, optimize capacity, and shift cost-intensive operations to India where feasible.

The restructuring of Metalcastello is complete, and further actions will be demand-driven. This balanced approach reduces downside risk from European automotive volatility.

Aluminium & EV: The Next Investment Cycle

Aluminium is transitioning from drag to driver. The vertical had previously faced headwinds due to platform-specific underperformance and accounting adjustments. However, management has entered a fresh capex phase targeting high-tonnage machined castings and EV-related housings.

Approximately 10% of new Indian order wins in CY25 were EV-linked. Production ramp-up is expected in Q3–Q4 CY26, potentially catalyzing both revenue and margin expansion.

With low-pressure fabricated fuel rails, precision forgings, aluminium EV housings and high-tonage press panels in the pipeline, the company is positioning itself as an EV-ready supplier without overexposing capital to uncertain demand curves.

Exports & Trade Clarity Add Incremental Tailwinds

Geopolitical clarity has improved export visibility. Management indicated that an 18% US tariff settlement has reduced uncertainty for Indian exports. Simultaneously, progress on the India–EU Free Trade Agreement may strengthen forgings and iron casting shipments.

Iron casting exports to the US are expected to commence mid-year, providing incremental revenue support.

Financial Snapshot: Strong Cash, Improving Earnings

Below is a summary of projected financial performance:

Valuation metrics show P/E compressing from 22.9x in CY25P to 17.6x by CY27E, while EV/EBITDA declines from 12.8x to 9.6x.

Balance Sheet: A Strategic Advantage

CIE Automotive India operates with net cash. Cash and investments of Rs 1,660 crore significantly exceed total debt of Rs 386 crore, implying a negative net debt position.

Operating cash flow equaled 71% of EBITDA in CY25, and growth capex remains disciplined at roughly 5% of sales. This liquidity buffer provides flexibility for both organic expansion and potential bolt-on acquisitions.

Return ratios remain healthy, with RoCE projected to improve toward 13.8% by CY27E.

Valuation & Investment Thesis

ICICI Securities values the stock at 21x CY27E EPS, arriving at a target price of Rs 600.

Key triggers:
• Accelerating India revenue growth
• Operating leverage-led margin expansion
• Aluminium and EV ramp-up
• Export-led incremental upside
• Strong free cash flow yield

Key risks:
• Trade barriers impacting European operations
• Slower-than-expected Indian automotive demand

Technical & Price Context

The stock has traded within a 52-week range of Rs 357–524. At Rs 500, it is consolidating near upper band resistance, suggesting that sustained earnings delivery could drive breakout toward the Rs 600 target over the next 12 months.

Conclusion: Compounding with Cushion

CIE Automotive India represents a rare blend of cyclical participation and structural balance sheet strength. India’s automotive expansion, improving product mix, and disciplined European restructuring create a foundation for steady earnings growth. With strong cash reserves, rising order intake, and improving export clarity, downside risks appear contained.

At 17–19x forward earnings, with visible double-digit EPS CAGR through CY27E, the stock offers an attractive risk-reward profile for medium-term investors targeting Rs 600 over the next year.

Disclaimer: Investors should conduct their own due diligence and assess risk tolerance before making investment decisions. Market conditions and sectoral dynamics may change materially.