Note: I had a hard time understanding this line - Investment in areas agnostic to the powertrain to ensure long-term growth and stability
Here is what it means:
Agnostic to the powertrain: “Agnostic” in this context means not specifically tied or dependent on any particular type of powertrain. A powertrain refers to the mechanism that drives a vehicle, including the engine, transmission, and drivetrain. Examples include internal combustion engines (ICE), electric powertrains, and hybrid systems. Being “agnostic” means the investments are not dependent on or specifically designed for any one type of powertrain.
Disclaimer: Not invested yet. Will be adding in near term.
The company did not do anything significant during the 2013 - 2020 period ( 1 in the P&L image below). 2019-2020 and 2020 - 2021 was a very hard year for both OEMs and Tier 1s as there was a transition from BS4 to BS6 along with slow export demand and ILFS crisis which created a liquidity crunch in the system.
Post covid however the company sprung back with phenomenal numbers with all the cylinders kicking such as exports, Aftermarket and domestic business in FY 23 and FY 24. FY 22 had the challenge of chip shortage which pulled down the demand from the OEM side and unavailability of containers for export.
Shriram piston is a great precision manufacturing play as over a long cycle the gross margin has been around 55%.
Due to introduction of complex BS 6 engines and further move towards ethanol the demand for the pistons will be there for the OEMs and the replacement market. The replacement market is relevant for CV as they go through 2-3 engine overhaul cycles. Exports are also done to some global OEMs where originally Kolbenschmidt ( JV partner) used to supply.
