We raise our EBIT estimates by ~1% for ‘21e-‘23e, partly due to increased organic growth assumptions for E-mobility and Electrical distribution products, but primarily on higher margin assumptions for the group based on lower-than-expected price and cost pressure.
Strong momentum and position, 34x ’21e EV/EBIT
The stock has been flat recently (+2% L3M) and is now trading at 34x ‘21e EV/EBIT, which we expect to come down to 27x in ‘23e. However, we continue to view GARO as an attractive stock, with potential upside given that: 1) demand within E-mobility is high and 2) GARO continues to gain market share on the international market. In addition, we believe that GARO offers appealing EBIT growth at a 20% CAGR in ’20-‘23e, with the margin expanding from 13.1% in ’20 to 15.0% in ‘23e.
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