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.
SEBI Research Analyst Registration No. INH100001690
Research Analyst Details
Name: Ekansh Mittal Email Id: [email protected] Ph: +91 727 5050062
Details of Associate: Not Applicable
Analyst Certification: The Analyst certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report.
Address - 7, Panch Ratan, 7/128, Swaroop Nagar, Kanpur - 208002, Contact No. - +91-7275050062
Compliance Officer - Mr. Ekansh Mittal, +91-9818866676, ekansh@
Grievance Redressal - Mittal Consulting, grievances@
“Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors”.
“Investment in securities market are subject to market risks. Read all the related documents carefully before investing.”
The views expressed are based solely on information available publicly and believed to be true. Investors are advised to independently evaluate the market conditions/risks involved before making any investment decision
This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Ekansh Mittal/Mittal Consulting/Katalyst Wealth is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Ekansh Mittal or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Neither Ekansh Mittal, nor its employees, agents nor representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. Ekansh Mittal/Mittal Consulting or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement.
The recipients of this report should rely on their own investigations. Ekansh Mittal/Mittal Consulting and/or its affiliates and/or employees may have interests/ positions, financial or otherwise in the securities mentioned in this report. Mittal Consulting has incorporated adequate disclosures in this document. This should, however, not be treated as endorsement of the views expressed in the report.
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Whether the research analyst or research entity or his associate or his relative has any financial interest in the subject company/companies and the nature of such financial interest – No
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