I want to initiate a thread on a company recently listed which I found interesting. Since this is my first post on ValuePickr, so I highly recommend admin and moderators to correct the mistakes and give further insights to this thread.
Market cap- 1947 CR
CMP- 500
Book Value- 136
Promoter Holding- 70.7%
FII- 1.66%
DII- 16.55%
Public- 11.10%
Overview[1]
Incorporated in 1982, Rishabh Instruments Limited is engaged in the business of manufacturing, design, and development of Test and Measuring Instruments and Industrial Control Products.
Business[1]
The company provides cost-effective solutions to measure, control, record, analyze, and optimize energy and processes through an array of products. It also provides complete aluminum high-pressure die-casting solutions for customers requiring close tolerance fabrication (such as automotive compressor manufacturers and automation high precision flow meters manufacturers), machining, and finishing of precision components.In 2011, Rishabh Instruments acquired Lumel Alucast, a non-ferrous pressure casting company in Europe, which helped the company establish a strong foot in manufacturing and supply of low-voltage current transformers. The company also provides certain manufacturing services which include mould design and manufacturing, EMI/EMC testing services, Electronic Manufacturing Services, and software solutions (e.g., MARC).
Segments
Rishabh Instruments has 4 segments: (a) electrical automation devices; (b) metering, control, and protection devices; (c) portable test and measuring instruments; and (d) solar string inverters.
Network[2]
The company has 3 manufacturing units (Nashik, Poland and China), 270+ dealers across the globe reaching 70+ countries and 150+ dealers across India
HISTORY
In ancient times when computers ran on 8MB, India was yet to open its foreign trade policies, Rishabh started as an Analog Panel meter company in 1985 in the small industrial town of Nashik. The initial struggle was tough, but things took a roundabout as our German technology partners realized our manufacturing skills and started buying our products. We started exporting Analog Panel meters to companies who admired our mark for quality. The early 90’s was when Rishabh stabilized as a company; this is when the company found its feet.
In the late 1990’s the electro-mechanical era started shifting towards digital and to keep up with the trend, Rishabh started manufacturing Digital Panel Meters, Transducers, and a range of test and measuring products like Multimeters and Insulation Testers. Again, technology was collaborated from European partners and products were manufactured in India.
Rishabh also realized its growing expertise in buying, cost reduction and other set of manufacturing skills and soon also started contract manufacturing of electrical instrumentation products for companies in western nations. It became a strong outsourcing partner to companies who apart from the cost advantage also loved Rishabh investments in new technologies.
Done with borrowing & following technology, summer of 2003 was when an independent Research & Development Unit, Trishala was inaugurated with one and one aim only - to create technology. This led to the introduction of our new products completely developed & manufactured in Nashik. Many products lines have since been added and Rishabh has found its place in the Elegtrical Measurement Industry as a technology innovator.
To accelerate growth, apart from its sustaining organic growth endeavors Rishabh acquired Lumel S.A. in summer of 2011 from the Polish state. The synergies of the joint unit have become a turning point in Rishabh history. Rishabh cost control and market dominance and Lumel European base with a solution oriented product basket have turned out to be game changer for both organizations.
Revenue and EBITDA:
- Revenue at the console level has increased by about 38%
- EBITDA at the console level has gone from INR205 million to INR207 million
- Adjusted EBITDA at the console level has gone from INR205 million to INR303 million, a growth of about 48%
- Revenue in India has grown 37%, with export revenue growing faster than domestic revenue
- EBITDA for the Indian operations has grown from INR98 million to INR141 million.
Segment-wise revenue growth:
- Aluminium high pressure die casting: 32%
- Metering, control, and protection devices: 47%
- Electrical automation: 10%
- Test and measurement: 7%
- Solar string inverter: 3%
Lumel SA (electronic business):
- Revenue has grown from INR280 million to INR400 million
- EBITDA has grown from INR37.7 million to INR77.19 million
Lumel Alucast (aluminium die casting business):
- Revenue has grown from INR282 million to INR372 million
- Growth in both automotive and non-automotive segments
Guidance and future plans:
- Aims for a medium to long-term growth rate of 20-25% in revenue and 18-20% in EBITDA
- Plans for expansion of production capacity and inorganic growth opportunities
- Expectations of growth in the solar string inverter market and potential for exports
- Government support through the MSIP scheme and potential benefits from European Union funds
- Focus on projects related to green energy and storage
- Seeking partnerships with companies interested in collaborating on research projects
- Plans for future acquisitions in the aluminum die casting and electronic segments
- New capacity being added in India for both export and domestic markets
- Targeting 20-25% growth in the next few years
- Efforts to address the Indian market in the aluminum die casting segment
R&D:
- R&D tie-up with an IIT, but no specific details provided
- No disclosure on average R&D spend in the last 3 years or future projections
- R&D spend is 2.5% to 3% of total revenues and will continue in the future
- Collaboration with IIT Jodhpur for research and development in green energy
Product strengths:
- Strong position in current transformers and analog panel meters
- Power quality analyzers also a strong product group
Profitability and margins:
- Working on improving profitability in Europe, particularly in the aluminum die casting business
- Margins for aluminum die casting expected to improve in the next one to two quarters
- Expectation of improved margins in aluminum die casting business in the medium term
Other points:
- Marg software is a SCADA software that helps with energy efficiency and automation in plants
- Rishabh Centre for Innovation in Green Energy is a philanthropic initiative
- Ideal ratio of export to domestic sales is 50-50
- Fungibility of production lines in both electronic and aluminum die casting segments
- Expectation of similar growth rates between Lumel and India businesses in the next few years
- Commitment to transparency and long-term investor relations.
Disclosure- Tracking, no investments yet.