Came across this company which I feel might hold value.
Company briefly summarised by Screener.in
ACGL is a company that manufactures sheet metal components, assemblies and bus coaches at its factories. The co. is supplier of pressings and assemblies to Tata Motors’ Pune factory.
ACGL has a current MKT cap of 852 Cr trading at a CMP of 1400 with a ROCE of 14.3%
Tata Motors holds a 49% stake in the company and 6.6% by Economic Development Corporation of Goa.
Company sells buses both domestically and in exports, with 25% of bus bodies being supplied for exports.
ACGL derives 80-90% of its total revenue from TML alone. The firm has been manufacturing and
assembling bus bodies in Goa for more than three decades. Being part of the Tata group, the group continues to extend managerial support with strong board representation in ACGL and benefits from the expertise, management team, and ingenuity of the larger organisation. The Tata group is strongly represented on the board of directors (BOD) of ACGL by OV Ajay, who serves as the company’s CEO and Executive Director.
According to their 22-23 AR:
Company has stepped up its efforts
in both upgrading its manufacturing facilities and also its
line-up of new models of EV buses that includes the
prototype of an electric powered double decker bus. Your
company is now getting ready for mass production of
electric buses for the ever-growing electric vehicle
Company is in process of updating their machinery and output capacity to keep up with demand of manufacturing additional EV Buses in FY 24-25.
From their 2022 CARE rating report:
The liquidity has remained robust, driven by liquid investments as against no long-term debt repayment obligations.
Furthermore, the company has extended callable inter-composite deposits (ICDs) to TML to the tune of ₹74 crore as on June
2022. The company also has a liquidity buffer consisting of unencumbered cash and bank balances and secured liquid
investments. With comfortable gearing levels and low utilisation of bank lines, it has sufficient gearing headroom to meet any
incremental working capital or capex needs over the medium term
Company’s Sales (with other income) for the financial year 2022-23
was Rs 514.15 Crores as against Rs. 289.07 crores (net of taxes) in the
preceding financial year. The Company’s Profit before tax during the financial
year 2022-23 was at Rs. 37.12 crores (after exceptional income/(expense)
and before other comprehensive loss) as against profit of Rs. 3.34 crores in
the preceding financial year. Net profit after tax stood at Rs. 26.30 Crores as
compared to a profit of Rs. 2.17 crores in the preceding financial year.
During FY 2022-23, your Company sold 5,715 buses.
The company’s threat comes from multinational companies in Electric Vehicle space and various tie-up made by local bus body builders with foreign collaborators, could have an impact, especially in Electric Buses from domestic OEM’s.
Steel is a crucial component in bus body manufacturing, which witnessed a sharp hike in prices from ₹58,581 per tonne in FY21 to ₹84,962 per tonne in FY22. ACG negotiates prices with TML in case of adverse movement in the raw material prices on a quarterly basis.
This is my first post in this esteemed forum. Kindly point out if I have missed out on sharing any other important information. All information shared here is via Company’s Annual report and their 2022 CARE ratings report.
Any views and counterviews would be greatly appreciated.