Subros spurts 14% in two days; here's what's keeping investors upbeat

Shares of Subros in Tuesday’s deal extended their previous gain and climbed as much as 2.88 per cent to day’s high price of Rs 514. The gains in the stock are led by the road transport ministry’s ruling on mandatory AC installation in drive cabins of N2 and N3 trucks.

Further, the smallcap auto components in its analyst meet on Monday guided for a strong growth guidance. The company expects to outperform the industry by 2-3 per cent.

The company in its analysts meeting said that for complying with the new road transport ministry directives it is working on the product development phase of the ACs that are to be mandatorily installed in driver cabins in N2 and N3 category trucks going forward. From the segment, the company’s management expects a revenue stream of over Rs 150 crore.

At present, the company’s AC fitment ratio stands at 24 per cent, nevertheless, its focus has waned on the back of low margin profile of the home AC segment.

In the short term, the company targets a margin of 10 per cent, while for the long term it has set the target as 12 per cent. For the fiscal year 2023, the company’s margin was placed at  6 per cent.

The company over the next 2-4 years expects its revenue to soar by 3 times in the bus AC space, while for its Tractor thermal segment, it sees the revenue to skyrocket by 7 times.

Established in 1985, Subros is the Largest Air Conditioning & Thermal Products company in India.