G.G. Automotive Gears Ltd (GGAG) is a Dewas (Madhya Pradesh)–based manufacturer of heavy-duty gears and pinions. Established in 1974, the company originally made automotive gears but successfully pivoted to producing medium to large gears for locomotives and Industries.
Over 50+ years GG has established itseld in locomating gears market, delivering traction pinions, bull gears, axle and drive gears for electric and diesel locomotives. Its facilities are highly integrated: the Gear Division can machine gears from 1 to 35 module (100–1500 mm diameter) and the Forging Division handles 10–100 kg components. The company now also serves industrial sectors (gearboxes, wind turbines, mining equipment, etc.) alongside railways.
Let’s walk you through the timelines and quick overview of the company:
1974: Incorporated as G.G. Automotive Gears Pvt. Ltd
1979: Executed its first major traction-gear order for Western Railways
1985: Began supplying gears to major Indian Railways production units (Chittaranjan Locomotive Works, Diesel Loco Works, etc.
1995: Listed on the Bombay Stock Exchange (BSE)
2000: Expanded internationally, winning orders in the U.S. railroad market
2016: Backward integration by setting up a forging unit (Unit II)
2017: A new line of CAPEX with additions to gear cutting and gear grinding facilities
2018: GGAG receives International Railway Industry Standard (IRIS) certification &
gets accredited by the Government of India as an ‘R&D Centre of Excellence’
2021: Relisted (Trading commenced) on the Bombay Stock Exchange (BSE suspended trading operations of GG Automotive Gears (a listed company) in 2003 -04 on account of non - compliance)
2021: Forayed into metro gears by supplying to European customers for single stage and two stage gearboxes
2022: Unit III commences operations, a facility dedicated to pinion shaft manufacturing
2024: Unit IV commences operations, adding 25,000+ Sq. feet of space for operations
The company caters to over 250+ OE customers(500+ total), which is backed by ISO:9001:2015 certificate by TUV INDIA.(Overview – G.G. Automotive Gears Limited) The manufacturing capabilities include producing helical and spur gears ranging from 50 mm to 1600 mm in diameter, with modules up to 35, hardened and ground to DIN class 3 / 4 accuracies. Supported by comprehensive product service capabilities, GGAG offers end-to-end solutions—from product conceptualization to rigorous testing— ensuring excellence at every stage of production.
Manufacturing Capabilities:
- 6,000+ MT of forging production capacity annually (Oil fired furnaces, 3 Ton MPM hammer, 500 Ton trimming press, induction billet heating)
- 10,000+ Gears produced annually
- 20,000+ Pinions/Shafts produced annually
- 150+ machines in-house
Infrastructure capabilities includes in house setups such as:
- Turning & Blanking- Complete CNC set-up in order to carry out operations such as milling, drilling, tapping and hard and soft part turning for components up to 1600 mm in diameter.
- Vertical Turning and Machining Centres
- Vertical Turning Lathes
- Horizontal Turning Lathes
- Vertical Machining Centres
- Radial Drilling Machines
- Facing & Centring Machines
- Teeth Cutting- CNC Hobbing set up for components up to 35 Module and 1600 mm in diameter, with internal teeth cutting capability between 500-1000 mm
- Heat Treatment: In-house heat treatment facility with furnaces capable of carrying out hardening, tempering and carburizing processes. The furnaces are equipped to handle components up to 1200 mm in diameter and 1600 mm in length.
- Pit-type furnaces
- Tempering Furnace
- Muffle Furnace
- Washing Machine Tank
- Oil Quenching Tank
- Normalizing furnaces
- Shot blasting & Shot Peening
- Hard Finish Machining: CNC & conventional set up for hard finishing/post heat treatment operations such as bore grinding, face grinding and hard part turning for components up to 1200 mm in diameter.
- Gear Grinding: CNC Gear Grinding set up adequate for single ribbed profile grinding of teeth capable of grinding components up to 1500 mm in diameter, 35 in module & DIN 4 in terms of quality class. Internal grinding available from 500-100 mm in diameter.
Before we start, a quick glance on what locomotive traction gear is: To understand locomotive traction gears, you need to comprehend their crucial role in transferring power from the engine to the wheels. Traction gear materials play a vital role in the performance and efficiency of locomotive traction systems. The crucial contribution to the efficient transfer of power from the locomotive’s engine to the wheels, ensuring optimal performance and reliability. Their primary function is to transmit the torque generated by the traction motor to the wheels
Traction gears are helical or spur gears typically housed in the bogie-mounted gear cases of locomotives. The system includes:
- Traction Motor Pinion (small gear mounted on the traction motor shaft)
- Bull Gear / Traction Gear (larger gear mounted on the axle)
The materials used in traction gears must possess high tensile strength, durability, and resistance to wear and tear. Common materials include alloy steels, carbon steels, and sometimes even ceramics for their exceptional wear-resistant properties.
The key products manufactured by the company includes:
- Railway Gears: Axle gear for ABB and EMD loco, Engine gears for EMD & GE Loco, Pinions and Pinions shafts for EMD & GE.
- Forged Parts:
- Industrial Helical Gears: GGAG manufacturer loose gears as well as complete assemblies for end applications such as * Cement Plants, Steel Mill, Refineries, Marine, Mining, Cooling Towers, etc. Other products include Double Helical/Herringbone and Industrial Helical pinion shafts.
- Mining & Earth Moving Equipment: Products include Spur, Helical, Straight Bevel, Spiral Bevel, Drive Shafts With Spline, Compound Gears, Sprockets, Internal Gear, Planetary and Sun Gears.
The company derived a significant portion (70%) of the revenue from railway gears segment as per credit rating report. Let’s dig deep into how GG Auto is placed vs peers across products categories:
i. BLW (Banaras Locomotive Works) Gear turbo idler: Approved vendor. (Total six approved- M/s Supreme industrial works – Mumbai, Shanthi gears limited – Coimbatore, Progress rail locomotive Inc. – Lagrange, Elecon engineering company limited, Overton Chicago gear corporation – USA
ii. BLW Gear Lower Idler (Total 6 approved vendors)- Overton Chicago Gear Corporation/ USA, Elecon engineering, G.G. Automotive Gears Ltd, Progress rail locomotive Inc, Shanthi gears limited, and Trina NRE Transportation limited in addition to one developmental vendor – Supreme industrial works.
iii. ICF (Integrated Coach Factory) Traction Gears and Pinions: There are four Approved vendors- BHEL(3000 coach sets), GG Auto(1008 coach sets), Kirloskar Pneumatic(1008 Coach sets) and Shanthi Gears( 2004 coach sets) and One developmental vendor- Kalyani Engineering works (1008 coach sets)
iv. BLW, Traction gears (Case hardened) for Alco Locomotves: GG is approved vendor (1800 units) with others being BHEL (3000 units), Diesel Locomodernisation(1000 units), and Kirloskar Pneumatic(1500 units). There are Five more developmental vendors in the segment namely Elecon(5000 units), Premium Transmission(5000 units), RDMC(1800 units), Shanthi Gears(2000 units) and Trina NRE (3000 units).
v. BLW Pinion 17 teeth (also for WDP4): GG is a developmental vendor here (6000 units) with four other developmental vendors and five approved vendors. GG Capacity being second largest only after Shanthi Gears (8000 units) far exceeding Elecon and BHEL.
vi. Traction Pinions, (Case hardened) for ALCo locomotives: Only four approved vendors, GG is the largest approved vendor (capacity wise- 3600 units) followed by BHEL (3000), Kirloskar Pneumatic(2000 units). There are Five developmental vendors including the likes of Elecon and Shanthi Gears.
vii. Axle Gear Steel (Carburizing Type)-Gear-77 teeth and 90 teeth: GG is a developmental vendor (3k units) along with Shanthi Gears and two others. There are Seven approved vendors including Elecon, BHEL, Kirloskar Pneumatic, Fairfield etc.,
viii. CLW Gear & Pinion for WAP -5 WAP-7 WAG-9: Four Approved vendors- BHEL, GG (Approved vendor for WAG-9HC/WAP-7 only), Kirloskar Pneumatic and San Engineering and Locomotive company. Four Developmental vendors including Elecon and Shanthi Gears.
ix. Gears & Pinions (other than 3-Phase Locomotives) This item is for Conventional Locomotive.: BHEL, GG Auto, Kirloskar Pneumatic, San Engineering and Trina NRE in total five Approved vendors. There’s one Developmental vendor- Popular Mechanical Works.
x. CLW Metallic Pinion For SB Oil Pump: This is also for Conventional Loco- BHEL, GG Auto, Kirloskar Pneumatic, Kristeel Corp and Popular Mechanical are the five approved vendors.
Clients: Marquee names like Indian Railways, CG Power, Alstom, Siemens Energy, Voith, AM/NS India, Medha, Jindal Steel and Power, Titagarh etc.,
What has changed in the recent times?:
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The company has made significant investments in machining, heat treatment, metallurgy, and
quality control. Additionally, we have expanded our facilities with new sheds totalling over 30,000 square feet- AR 2024 -
Scaling it up: Revenues grew to 114 Crores from 48 Crores in 2022- A CAGR of 33%, EBITDA grew to 17 Cr from 6 Cr- CAGR of 42%, PAT grew from 0 Cr in 2022 to 8 Cr in 2025 while EPS grew from 0.53 Rs to 8.16 Rs- A CAGR of 150%+.
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PPE increased from 39 Crores in 2024 to 53 Crores in FY25 coupled with the revenue scale up in past year indicates growing visibility from the clients for further capacities availability in near future. “With the capital expenditure (capex) being undertaken in fiscal 2025 towards increasing the capacities and operating efficiency, business performance will likely remain healthy over the medium term.”- CR 2025
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Diversification: The company has diversified its product portfolio, with gears and pinions, and caters to metro, oil and gas, wind energy and earth-moving equipment sectors. The company has also succeeded in diversification of revenue from the railway gears segment, which will account for less than 70% revenue in fiscal 2025 as against 90% in fiscal 2020.
More non railways exposure may help the company efficiently manage their working capital and ensure gain higher gross margins across products viz-a-viz railways where a lot of trials and audits along with fixed supply chain requirements constraint the company to innovate.
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The company raised approx 12.5 Crores in Sep 2023- Promoter took 4,25,000 equity shares and 9,45,000 warrants each at 60 Rs. Also a non-promoter (but looks related- Mr. Kennedy Gajra was director till 2018) entity Belkenn Loco Parts Pvt Ltd took 7,13,833 warrants also at Rs 60.
The quartely revenue run rate has grown from 24 Crores in Sep ‘23 to 34 Crores in Mar’ 25 along with highest quartely 18% EBITDA margins in last few years. (led by reduced COGS it appears). -
Industry Tailwinds: India has emerged as a global leader in railway locomotive manufacturing, achieving a record production of 1,681 locomotives in the financial year 2024-25 . This milestone surpasses the total locomotive production of regions such as the United States, Europe, South America, Africa, and Australia , reaffirming India’s growing dominance in the global railway sector. In the financial year 2024-25, Indian Railways achieved a record production of 1,681 locomotives across its manufacturing units.
The production was distributed as follows: Chittaranjan Locomotive Works manufactured 700 locomotives, Banaras Locomotive Works produced 477, Patiala Locomotive Works contributed 304 locomotives and 100 locomotives each were manufactured at the Madhepura and Marhowrah units
https://www.pib.gov.in/PressReleasePage.aspx?PRID=2117830
Export opportunity: India to export 150 locomotives to Africa worth over ₹3,000 crore
(India to export 150 locomotives to Africa worth over ₹3,000 crore - The Hindu)
100 MEMUs, 50 Namo Bharat trains to be added to railway fleet - Financial Express
Indian Railways to launch 1,000 new trains in five years, bullet train by 2027, 30000 wagons and 1500 locomotives being made in India every year: Ashwini Vaishnaw- Article
Competitors: BHEL Bhopal, Elecon Engineering, Shanthi Gears, Kirloskar Pneumatic, San Engineering, Supreme Industrial works and others. (Playing in a big league)
Risks:
- Presence of high class large competitors such as Elecon Engg and Shanthi Gears makes the field much competitive while they might have better integrated scope of operations in terms of supply chain and management bandwidth.
- Raw Material Fluctuations: Operating margin is exposed to volatility in prices of raw materials, such as carbon steel and non-ferrous and ferrous alloys, as raw material cost accounts for 50-60% of the operating revenue/manufacturing cost.
- Tender driven order book: The company has an order book of 105 Crores as per credit rating report but the work orders are tender driven with performance, capacities, long trials and other statutory requirements to be taken care of on a regular basis.
- Previously the company was penalised and trading was halted for a long time due to non-compliance of listing requirements.
- Working Capital: Because of Railways led revenues, working capital can stay stretched as the nature of business is such. Receivables stood at 24.59 Crores in FY25 vs 22.9 Crores in FY24. Debtor days stood at 79 days, Inventory days at 90 and Days payable at 89- All of which seems to be in an improving trend vs historical figures.
- Cyclical end user demand: The end user demand could flucutuate largely dependent upon government railway capex policy and modernisation efforts. Although the current scenario remains attractive for railway proxies the demand and delays can increase cash flow volatility.
Certifications and Accreditions:
Valuations: The company has delievered solid in last 3-4 years although on a very smaller base and in a segment which involves a large time from prototypes to factory and machining audits, field trials, from being a developmental vendor to finally getting approved by Railways.
The manufacturing setup also demands an integrated facility with in house forging, machining, heat treatment and other processes. (Gear Inspection & Measurement | Gear Grinding | Teeth Cutting | Hardening, Tempering & Carburizing | Shot Peening & Shot Blasting | CNC Bore Grinding | CNC Turning |VMC | Cylindrical Grinding | Radial Drilling | Metallurgical & Meteorological Laboratory | Forging | Hammer & Press | Induction Heating)
The current market cap of approx 230 Crores places the company at a 30x FY25E multiple and given the tailwinds in the railways locomotive segment and solid performance in the last 3-4 years, the company looks reasonably valued in addition to levers such as railways to private shift(operational efficiencies, larger TAM, and better margins?) and recent expansion in capacity as visible in Balance sheet- It can continue to innovate and grow in next few years.
The company although remains silent with very little to no public investor communications. My emails to the company remains unanswered till date largely questions related to expansion plans, diversification and growth opportunities. In case, fellow participants have more ground level inputs please add to the thread.
Disclosure: Invested since lower levels; Please do your own Due Dilligence! Micro Caps are risky bets.
Key References:
- https://www.financialexpress.com/business/railways-100-memus-50-namo-bharat-trains-to-be-added-to-railway-fleet-3883375/
- Massive Railway Boost For Bengal As Centre Approves ₹14,000 Crore Investment
- Cabinet approves railway line projects worth Rs 18,658 crore
- https://indiashippingnews.com/indian-railways-to-launch-1000-new-trains-in-five-years-bullet-train-by-2027-30000-wagons-and-1500-locomotives-being-made-in-india-every-year-ashwini-vaishnaw/
- Rating Rationale
- https://ggautomotive.com/
- https://www.bseindia.com/xml-data/corpfiling/AttachHis/7c9259a4-83d0-4d6c-a52f-e2f0481fe12d.pdf
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