Hello Sir,

Hope you are doing well.

Recently, I came across a stock by the name of Talbros Engineering. The 10 years numbers of the company looked very good and therefore I decided to dig deeper.

The company is engaged in manufacturing of Axle Shafts and is a sole supplier of rear axle shafts to some of its customers.

Below, we have shared notes from the Aug'22 CARE credit report of the company. Hope you find the details useful in your search of investment opportunities.


Before that, a few days back we released our New Stock Recommendation for Alpha and Alpha + Members 

It's a minerals processing company, largest in its segment, has captive raw material sources, grown PAT by ~300% in the last few years, de-leveraging balance sheet, 2nd generation promoters and available at around ~7 times post-tax earnings

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Talbros Engineering - Notes from CARE credit rating report

  • TEL has a long track-record of operations dating back to 1980 and was earlier part of the erstwhile Talbros Group
  • The Talbros Group was founded in 1930s by Talwar family and has been into manufacturing of automotive components since 1957
  • Talbros Engineering Ltd (TEL), originally a part of Talbros Automotive Components Ltd. was separated into another company in 1996
  • TEL is engaged in the manufacturing of automotive rear axle shafts and other splined shafts and forgings used in commercial vehicles, utility vehicles and tractors
  • TEL has total five manufacturing plants with total manufacturing capacity of 24 lakhs axle shafts per annum as on March 31, 2022
  • The company manufactures and sells 75% of its products to OEMs in the domestic market and remaining 25% are exported, primarily to the replacement market of North America
  • TEL has a long and established relationship with reputed OEMs and Tier-1 suppliers. Its top revenue contributors are well established players who enjoy strong market position in the industry like Mahindra & Mahindra, Ashok Leyland, Spicer India limited etc. and is the sole supplier of rear axle shafts to most of its customers for their specific models
  • The company derives major share of its revenue from the Utility Vehicles segment contributed 47% to the total gross sales during FY22 (PY: 47%) followed by Commercial Vehicle segment contributed 20% to the total gross sales during FY22 (PY: 18%) and tractors segment contributed 4% to the total gross sales during FY22 (PY: 6%) in the domestic market
  • FY 22 performance
    • The improvement in the operational performance of the company during FY22 is reflected by increase in volume from 15.64 lakh units to 19.56 lakh units of axle shafts along with improvement in per unit realization rate from Rs. 1,476 to Rs. 1,714 in FY22 backed by recovery in the auto industry except tractors, demand of which, remained low throughout the year
    • Further, increase in other operating revenue from Rs 8.27 crore to Rs 17.08 crore, majorly consisted of scrap sales and duty drawback also contributed towards improved operational performance
    • The PBILDT margin of TEL also improved by 134 bps from 11.76% in FY21 to 13.11% in FY22 on account of reduction in expenses of power and fuel, employee costs and manufacturing expenses like processing charges and repairs and maintenance of P&M, building etc. as company is constantly moving towards automation, lean manufacturing techniques and higher efficiency by continuously adding up robotic technologies thereby helping in reduction of factory lead time, efficient use of material along with replacement of old machines with Vertical Machining Centre (VMC) and Computer Numerical Control (CNC)which has reduced dependence on highly skilled labor
    • Going forward, the company has planned to incur capex of Rs. 30 crore which will be spread over FY23 and FY24, out of which Rs 11 crore shall be routine in nature and remaining for setting up of an additional unit in Faridabad




Disclaimer: This is not a recommendation to buy/sell Talbros Engineering. The securities quoted are for illustration only and are not recommendatory.


Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/


SEBI Research Analyst Registration No. INH100001690
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Name: Ekansh Mittal     Email Id: [email protected]    Ph: +91 727 5050062

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