Decent set of results .The growth and replacement demand for two-wheelers and three-wheelers in Q2 FY25 are continuing. These companies have also attempted to expand into newer international markets. Although there is a slowdown in the production of PV and CV components, it does not significantly impact Shriram pistons as they have diversified into various fuel systems ( I feel CNG, Flex fuels offer the largest source of oppurtunity). However, the export components still face challenges.
In the motor industry, Shiram Pistons’ potential for success lies in the substantial market size for two-wheelers and three-wheelers, which could potentially reach two crores annually (currently around 1.6 Cr ). Additionally, Shiram Pistons supplies to almost all OEMs would provide a strong foundation for cross-selling. Ensuring the quality of products and localizing them to avail subsidies are crucial factors. Currently, Shiram Pistons’ capacity is around 5 million (picked up from one of the previous concalls), and they plan to double it to 10 million. They have already acquired land in Coimbatore for this expansion. I am not sure when revenues will come for this ( Expecting by Q1FY26 )
In terms of the motor market size, 2W OEMS sells 1.6 crores of two-wheelers annually, and this figure is expected to reach two crores in the coming years. Approximately 50% of this demand will be electrified, leading to a demand for electric motors and controllers of around one crore. Considering the current domestic production of only 10 lakhs of motors annually, the demand for motors by 2030 is projected to increase by 10 times, presenting a significant opportunity for Shiram Pistons. This growth is anticipated to start generating revenues for the controller business from the next fiscal year. Another trigger is the localization part which enables them to avail subsidies. SPR does business with almost all OEMs hence a sort of operating leverage will also play out in them.
In the injection molding segment, the market size is estimated to be around 3000 to 4000 crores, and Shiram Pistons currently holds a market share of 5 to 7%. They primarily focus on Japanese customers but plan to expand their customer base to include non-Japanese customers in the near future(They have started to supply to a few of them). SPR is also planning to expand this facility to. Additionally they have around 1000 Cr of cash for future expansion. They are able to grow at 2x the Industry growth seems healthy. Lets see if near term triggers of exports play out.
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