Atul Auto Limited

Stock Opportunities
583

Sales up 22.21% while other auto companies (mainly 4W) are showing declines.
https://atulauto.co.in/news-events.aspx

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584

https://economictimes.indiatimes.com/industry/auto/two-wheelers-three-wheelers/three-wheelers-may-have-to-go-electric-from-fy24/articleshow/69450703.cms

How does this impact Atul Auto?

585

Dear Vivek,

I heard in q3fy18 concall that Atul Auto developed the cng engine in-house. I am unable to find any more detail about this. Could you point me to some relevant source.

Thanks

586

I don’t think they conduct calls any more. CFO spoke about in-house engine for e-rickshaw

• E-3W: two types – e-auto (JV with JBM) and e-rickshaw (indigenous)
• E-auto completely new market, e-rickshaw already rolled out, taking feedback from market
• E-rickshaw made of soft distance, registration norms are different, max speed less than e-auto
• E-auto to compete conventional product

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Recent Management Interviews:



Notes:

  1. H2 is expected to be better. Slowdown due to NBFC crisis.
  2. Expect double digit growth for FY20. First quarter is typically soft.
  3. Ahmedabad plant in two phases: 30000 in first and remaining 30000 in second. Rollout of Phase-I to start end of year. Phase-II will be rolled out after Phase-I is utilized upto 80%.
  4. Exports contracts are postponed and seeing pressure.
  5. Receivables increased to 50 days due to liquidity issues and not expected to go up further. Expecting it to decrease to less than 40 days once liquidity crisis is resolved (Didn’t like Adhia’s confidence in this part).

Discl: Invested

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588

Latest Equirus report on Atul Auto.

Atul_Auto_4QFY19_Final Take 30.5.2019.pdf (367.1 KB)

Key Highlights:

  • ATA has not been able to make much of a mark in the electric 3W market due to cheaper competition from unorganized players. M&M is doing well in this space through its differentiated offerings; we believe ATA needs to up its ante in this futuristic space, else will be at a loss given diesel 3Ws getting replaced with electric 3Ws in city-shared mobility applications.

  • On the CNG front, the company has made good progress through its differentiated offering (larger space vs. products from competition); its CNG vehicles are doing particularly well in North India.

  • Export volumes grew 65% yoy in FY19 as the company gained good traction in countries
    like Nepal, Cambodia, Ethiopia and Ecuador. While Nepal has become a stable market
    over the last few years, ATA needs to build on its FY19 momentum in countries like
    Ethiopia and Cambodia. Exports contributed 11.1% of total volumes in FY19 (FY18: 8%).

With the government looking to shove EV down the industry’s throat, how Atul Auto goes about their strategy in this space remains a key monitorable.

Disc: Invested

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589

Hi All,

I am doing some research on this company. I have few queries which I would request clarifications:

1/ They are expanding the capacity to double the volumes. But is the overall 3W market growing at that pace to accommodate the high production?

2/ They are not the market leaders and as such don’t have any product differentiation. How they are planning to take market share?

3/ Do they have any advantage vs competition in exports markets which will enable them to continue the high growth?

Thanks

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590

Hi,

Atul auto sales figure declined.
3272 vehicles in July compared to 3855 in last July.decrease of 15.32 %
13786 vehicles in April to July(2019-20) compared to 14423 in last April to July(2018-19),drop of 4.42%

Thanks,
Deb

591

Anyone attended AGM?
Request you to share your views / notes…

592

I think AGM is on 30 September. You might have read last year’s notice

593
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I am looking forward to your answers to the above questions. Thanks in advance

595

Looking at the annual report it seems that further capex plans have been pushed further “As the future approaches, we are scaling up our capacity and optimizing production to be ready for any new challenges. Our new chapter in growth is taking shape in the form of our greenfield plant, which is under construction at Bhayla, Ahmedabad. To be ready by the beginning of FY 2020-21, this plant will expand our Capacity to 1,20,000 Units. This plant will add a big boost to our capabilities and empower us to take bolder leaps into the future.”

Any idea what has been the current utilization levels of existing plant given the overall auto slowdown?

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596

Current plant capacity is 60,000.
In FY19, they sold 50,000 and in FY20 April to August saw dip of about 7.5% in sales numbers.

I think they will do it in small phases instead of sudden expansion to 1.2 lakhs.

Discl: Invested

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597

Anybody seen their products in E Rickshaw

Mahindra E Rickshaw quite popular.

598
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599

I had wanted to ask some questions from the company. I had sent them a mail to “investorrelations@atulauto.co.in” but haven’t received a response. Pasting the questions here. Is there some other means of reaching out to the management.

  1. Where does our company source its CNG engines from?

  2. I live in a hilly region. I talked to some local auto rickshaw
    drivers about their feedback for Atul CNG autos. One common complaint
    was lack of sufficient power on inclines. I had received similar
    review 6 months back.
    Have you received similar complaints? If yes, how do we plan to solve this.

  3. Is the company on track to meet the BS VI deadlines. Any problem
    that the company is facing in meeting the deadlines. In an interview
    to cnbc, Mr. Jitendra Adhia, President-Finance, had said that for
    alternative fuels transition to BS VI our technical team is confident.
    Could you clarify more on this, does the in house technical team have
    the know how to ensure smooth BS VI transition.

  4. Why has the company stopped organising concalls. Any plan to restart.

Thanks

600

Engines most likely greaves cotton

Greaves cotton is main manufacturer

CNG engines generally not powerful wrt diesel

Diesel produce more torque

So popular in SUVs

601

I remember reading somewhere that for CNG engines they did not go with greaves since greaves did not have a CNG engine of the required size ready at that point

602

Can any investor here throw some light on why atul performed so poorly after 2014 when auto industry is growing in double digits. Is it because of poor MOAT? TVS and Bajaj displayed good numbers during this period. If its about poor MOAT, how did they manage to grow before 2014.