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Hidden Gem ZF Commercial Vehicle Control Systems India (CMP: ₹ 2,616, Market Capitalisation: ₹ 29,772 crore; Rating: BUY; Target Price: ₹ 3,170; Upside Potential: 21%)

ICICIdirect Research 26 Jun 2026 DISCLAIMER

ZF Commercial Vehicle Control Systems India (ZFCV) (erstwhile Wabco India), is the market leader in CV braking space and a technology-focused complete solutions provider.
For FY26, 48% of ZFCV sales came from OEMs, while Export accounted for 38% of the sales and Aftermarket with 14% of the sales.
ZFCV has demonstrated strong leadership in supplying advance braking solutions to the domestic M&HCV space and has also in the past showcased its capability in providing ADAS solutions to domestic OEMs.
Now, with government regulations mandating advanced safety technologies including ESC (Electronic Stability Control), AEBS (Automated Emergency braking system) and broader ADAS systems for CV’s > 6 tons from October 2027, we see this as a big positive for ZF CV as it can potentially double (~2x) its existing content per vehicle (pegged at ~₹ 40-45k) as the value for upgraded system is pegged at ~₹50k (~₹25k for ESC & ~₹25k for ADAS).
ZFCV’s current ADAS offerings, directly address these mandates, providing a competitive edge & has already secured full ADAS solution wins from two OEMs and is actively engaged with multiple others.
ZF combines high margin technology products with a stable and growing aftermarket business which delivered ~16% growth in FY26, providing resilience across cycles supported by deeper distribution expansion, mining sector recovery, and retrofit demand.
Although export performance remained under pressure due to weakness in the U.S. market and tariff related disruptions, early signs of recovery is seen in American demand while Europe remains relatively resilient.
With leadership position in the domestic M&HCV advance braking space, supported by its wide product portfolio, deep OEM relationships, along with long run way of content increase, we have a positive view on ZFCV and have BUY rating on the stock valuing it at ₹ 3,170 i.e. 50x PE on FY28E.
Cash rich B/S and core Return ratios is excess of 30% provide good margin of safety to our investment thesis.  
Company has recently executed a bonus issue in ratio of 5:1 i.e. 5 new shares of the company are allocated against existing 1 share. We see this as positive as it will substantially improve liquidity in the stock amid fundamental levers of outgrowing industry growth.
ZF presents a compelling play on rising CV demand, supported by regulatory-driven content-per-vehicle expansion and export growth tailwinds from easing US tariffs

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