This report is an updated version of the report published on 13 August 2025 at 12:09 PM AEST

ARB Corporation Ltd (ASX: ARB)

ARB is an Australian company specialising in the design, manufacture, and distribution of high-quality motor vehicle accessories. The company offers a wide range of products, including bull bars, suspension systems, and roof racks, catering to the off-road and 4WD vehicle markets. Its expertise extends to light metal engineering, positioning it as a key player in the automotive aftermarket industry.  

Recommendation Rationale – SELL at AUD 36.26

• Technical Standpoint: ARB’s share price has surpassed the R1 level recommended on 27 June 2025, marking a 13.31% gain since the prior recommendation. The approx. 14-day RSI is now around 65.98, moving towards overbought territory. This upward move raises the likelihood of a near-term pullback as profit-taking sets in, increasing the probable risk of short-term consolidation or downside retracement.
• Profitability Decline: In H1FY25, reported PBT decreased 0.7% YoY to AU$ 70.31 million and reported PAT fell 0.6% YoY to AU$ 51.0 million. The fall in earnings was partly driven by an 18% increase in employee-related expenses. Also, earnings per share went down by 1.2% YoY to AU$ 61.7 (cents) in H1FY25.
• Cash Flow Weakness: Cash provided by operating activities dropped to AU$ 45.9 million in H1FY25 from AU$ 71.6 million in the prior corresponding period, impacted by AU$ 38.1 million increase in inventory primarily due to the weaker Australian dollar.
• Demand Slowdown in Core Models: In H1FY25, new vehicle sales for ARB’s key 4x4 models fell sharply vs with H1FY24; Toyota Hilux 4x4 decreased by 23%, Ford Ranger 4x4 down by 21%, and Isuzu D-Max 4x4 declined 21%. This decline in core platform sales poses a direct headwind to accessory demand despite ARB’s capability to service these models with a full range of products.

ARB Daily Chart

ARB Daily Technical Chart, Data Source: REFINITIV

Valuation Methodology: Price/Cash Flow Approach (FY June'26E) (Illustrative)

The stock might trade at a premium to its peers considering its 5.9% YoY revenue growth in H1FY25 to AU$ 361.7 million, 15.4% uplift in export sales with US sales up 18.7%, and growth across other international markets. For conducting the valuation, peers including Eagers Automotive Ltd (ASX: APE), Beacon Lighting Group Ltd (ASX: BLX) and PWR Holdings Ltd (ASX: PWH) have been considered.

Given its current trading levels, recent rally in the share price, and risks associated, it is prudent to sell the stock at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 36.26, as of 13 August 2025 at 11:10 AM AEST. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 13 August 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Note 5: Dividend Yield may vary as per the stock price movement. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices