The improving product mix is definitely contributing already. Windmill castings, alloy wheels, hydraulic cylinders and air suspensions all have better margin in double digits. While the revenue growth will look flat until the CV cycle and export turns, the margins are definitely improving and will probably peak at over 9 % once the CV cycle also improves. With debt getting reduced (and re-rated in due course) from the 300 Cr+ Operating cash flow, it will slowly shift into a Rs.6000 Cr business with a 9% EBITDA margin and a 200 to 250 Cr PAT in 2-3 years. Not a bad investment at a 1700 Cr market cap esp when other Auto ancilliary companies with barely any growth and definitely no margin growth are already quoting at 30 to 50 times earnings (range depending on how many times the words “EV” and “Lithium” appears in their concalls)
Disc: invested and added this week
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