The average target price of OTKAR.IS is 611 and suggests 56% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 633.6. This translates into 61% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 570.0. This suggests 45% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Otokar Otomotiv ve Savunma Sanayi A.S. engages in manufacturing and selling commercial vehicles in Turkey. The company provides off road vehicles, armored vehicles, minibuses, midibuses and autobuses, trailers, semi-trailers, light truck, and cross-country vehicles. It also operates buses, light trucks, wheeled and tracked armored vehicles, and turret systems. The company exports its products. It serves the automotive, transportation, logistics, and defense industries. The company was founded in 1963 and is headquartered in Istanbul, Turkey.

Turkey

Otokar Otomotiv ve Savunma Sanayi A.S.

Consumer Cyclical

The company tries to pay dividends regularly but only sometimes does so. It has paid dividends in roughly half the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. On average, the company pays dividends annually. 

OTKAR.IS reported revenue of TRY 32 317mn in the last 12 months, up 19% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. Market expects EPS to reach TRY 7.85 in FY25.

Over the past six months, the stock has consistently fallen, resulting in a 15% total decrease. When measured against its worldwide peers from the same industry (as shown above), the stock has been weaker, underperforming by 7ppts. There is a distinction between the stock's performance and that of its peers from the same country and industry. Over six months its performance trailed that of this peer group by 12ppts and its growth decelerated by 12ppts in the previous month. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

The company has reported average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 16.5% in the last 12 months, a decline from 22.2% in FY23. 

Historically, OTKAR.IS has reported modest net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -9.1%, down from 7.2% in FY23. 

Otokar Otomotiv ve Savunma Sanayi A.S. reported a return on equity (RoE) of -35.7% in the last 12 months, down from 37.8% in FY23. The market consensus projects an RoE of 13.0% in FY24, again behind its peers. 

Another important profitability metric, return on assets (RoA), amounted to -7.7% in the last 12 months, a decrease from 8.4% in FY23. The market analysts predict that RoA will be 3.0% in FY24, again weaker than its peers. 

In the last 12 months, the return on capital employed (RoCE) declined to -18.0%, below the peers. The consensus estimate for FY24 for RoCE is 26.7%, however, this time ahead of the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.2 in the past several years. This ratio implies a weak shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are acceptable. In combination with good business standards, shareholder rights are protected.

OTKAR.IS has above average trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is usually quite stable and remains mildly favourable on the days with the lowest activity. However, please consider that under highly turbulent market conditions, the trading volume tends to decrease significantly. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to weak positions in its industry, negligible return on capital, poor working capital management, inadequate interest coverage, and an unfavourable capital structure. We note resilient historical revenue growth, among the positive credit factors. 

In highly turbulent market conditions, OTKAR.IS is not overly volatile. In other words, the stock will fall less than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be low. 

In normal market circumstances, OTKAR.IS is moderately volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move slightly wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from limited to mild. We would also like to highlight the mild intraday volatility of the instrument. 

Based on key historical and expected multiples, the stock is slightly overvalued relative to its peers. Specifically, the stock is fairly valued on P/E, neutral on EV/EBITD. 

Otokar Otomotiv ve Savunma Sanayi A.S.

TRY 408.25

4

Otokar Otomotiv ve Savunma Sanayi A.S.

TRY 408.25

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

TRY 408.25

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