About the Company:
The company is an engineering-led manufacturer specializing in complex and critical precision-engineered components for both automotive and non-automotive sectors. It produces a wide range of precision-forged and machined components for vehicles, as well as precision components for aerospace, off-road, agriculture, and other industrial segments. The company is recognized as a leading global supplier in its field, with a strong presence in India, Europe, and the USA. It operates 17 manufacturing facilities, with the majority located in India and one in Sweden. The company has also expanded into the electric vehicle (EV) market, with 18% of its FY24 order book dedicated to EV components.
The company’s revenue is primarily driven by its automotive segment, which accounted for 88% of its FY24 revenue, while the non-automotive segment contributed 12%. It serves a diverse clientele, including nine of the top ten automakers in India, and has a growing presence in the aerospace and defence sectors. The company is also actively investing in strategic initiatives, such as a large aerospace and defence facility in Bengaluru and a stake in a technology firm specializing in advanced radar and sensor systems. Its order book for FY24 stands at INR 1,592 Crs., with a significant portion coming from export markets.
Our investment interpretation:
Our investment in this company was driven by its strategic move beyond the traditional automotive sector into high-growth areas such as defence and aerospace. We recognized the company’s ability to diversify its revenue streams, with a focus on precision-engineered components that cater to complex, high-margin industries. This expansion, coupled with its significant stake in the electric vehicle (EV) market, reinforced our belief in the company’s long-term growth potential.
We were particularly impressed by the company’s high-quality operations and consistent delivery of superior margins, supported by a team of A-grade technocrats and professional management. The leadership’s vision and execution capabilities were key factors in our assessment, giving us confidence in their ability to navigate the evolving industry landscape.
While we noted the potential overhang of equity dilution due to a PE exit, our consistent evaluation of the company solidified our conviction to stay invested for the long term, confident that the company’s strategic initiatives will continue to generate value across automotive and non-automotive sectors.
Returns:
MCap on date of Investment: INR 4,568 Crs.
MCap on date of Exit/ Today: INR 8,751 Crs.
Multiple on Invested Capital (MOIC): 2x
