Talbros Automotive Components Limited (TACL)

[Ballaji_Vijayan]

Confirmed in the Q3 call that Guided 2200 cr for all of group sales by FY27. So, Talbros contribution is expected to be 1400 cr. So, Revenue is likely to be doubled in 3 years, approx 25-30% growth. Company do not have pricing power. Assuming 8% PAT, 20 PE, Market cap will be 2200 cr by FY27. About 35% increase. They are looking to increase exports to 35% revenue so lets assume 10% PAT, 25 PE, Mcap will be 3500 cr. So, essentially, 35% to 100% jump from current price in 3 years time.

They sold off the Japanese JV to Nippon for 81 cr (40% share). Their biggest customer is Maruti Suzuki. I would have preferred a Japanese company like Nippon on the board. Management said that the JV is growing very slow so they are focussing on businesses with 20+% growth potential.

With all this info, Risk Reward ratio seems tilted. I bought small tracking position since i did not have big exposure to Auto market and thought that diversified auto component player maybe a good bet. But now, I am wondering!

What do you all think?

[Jaspreet]

current rev is 700cr pa. they are targeting 2100 by 2027. doesnt that make it 3x in 3 years?

[Ballaji_Vijayan]

I just listened to their concall. They said 2200 target was for group sales. Talbros has only certain JV % of subsidiaries, so, Talbros specific revenue target will be lower than 2200. Estimation is that it will be 1400.

[Govind_newbie]

They have given the breakup in the PPT how they will achieve 2200Cr on group level.
700 Cr from the Gasket business, 500 Cr from the Forgings business. Another 1000 Cr from the JVs where they have 50:50 partnership, so we can assume 500 Cr revenue from the JVs. So Talbros sales could go to 1700 Cr if they can deliver.
As they have guided for EBIDTA margin of 15-16%, if they achieve that, PAT margin can go as high as 11%. They have achieved 11.3% in last quarter. That gives us PAT of around 190 Cr.
I haven’t accounted for debt reduction, which can further add to the bottom-line.
If we take peers P/E, most of them are trading at 30+ PE. In best case scenario, if they get 30+ P/E, market cap could go as high as 5500Cr+. In worst case, it could still reach 2400-2500 Cr.

[Khalidbashir1993]

Which indicator is it name please simple volume by

[Tapish_Talaich]

The only thing stopping me from buying at this price is stock being in ASM Stage 3 , can someone explain why it is in Stage 3

[ranvir]

Talbros Auto -

Q4 and FY 24 Concall and results highlights -

Company’s operating divisions -

Sealing Division - Sealing solutions, cylinder head gaskets, secondary gaskets, plastic moulded components and heat shields. FY 24 sales @ 515 vs 434 cr YoY. EBITDA @ 81 cr

Forging Division - making products like - Vehicle Towing solutions, Rear Axle support brace, gear blanks, tube yokes, flange yokes etc. FY 24 sales @ 277 vs 219 cr YoY. EBITDA @ 47 cr

Talbros Mareli JV (50:50)- design, development and manufacture of suspension systems, twist beam axles, EV cradles, EV battery structural components etc. FY 24 sales @ 260 vs 210 cr YoY. EBITDA @ 36 cr

Talbros Marugo JV ( 50:50 ) - making high quality anti-vibration products and hoses. FY 24 sales @ 123 vs 85 cr YoY. EBITDA @ 9.5 cr

FY 24 outcomes -

Revenues - 790 vs 653 cr
EBITDA - 127 vs 93 cr ( margins @ 16 vs 14 pc )
PAT - 82 vs 55 cr (adjusted for exceptional items)

ROCE @ 21 pc
ROE @ 20 pc
Debt/Equity @ 0.16

Q4 outcomes -

Revenues - 207 vs 176 cr
EBITDA - 35 vs 26 cr ( margins @ 17 vs 15 pc )
PAT - 23 vs 17 cr (adjusted for exceptional items)

In Apr 24, company has bagged an order for supply of Suspension Arms for both ICEs and EVs worth Rs 1000 cr from a leading European OEM ( to be executed over next 8 yrs ). This order will add new customers for the company. Supplies to commence in Q4 FY 25

Total orders received in last 12 months @ 2000 cr to be executed over next 6-8 yrs

Company divested its stake of 40 pc in its JV with Nippon group - namely Nippon Leakless Talbros. Received Rs 65 cr from the divestment

Capacity utilisations in most of the company’s divisions are between 80-90 pc. Company is in the process of capacity expansion in all these divisions. Total capex required across all these divisions is around 130-140 cr. Most of the added capacities should come on stream by Q3 FY 25

Current export sales @ 25 pc of company’s revenues. Likely to grow @ faster rates going forward. Export margins are better than domestic sales margins

Disc: initiated a tracking position, biased, not SEBI registered

[Kuber_Chauhan]

why they haven’t added subsidiaries numbers in consolidated statements? FY24 topline (773 cr - Gasket + forging) TACL standalone in PPT

[Govind_newbie]

Slowly slowly growth has vanished. Topline is flat since last 7 quarters. Bottomline has been growing due to margin expansion but that has a ceiling. Though they have maintained the guidance of 2200 Cr group topline by FY27 but looks tough to achieve. Let’s see how confident they are of achieving it in the concal.

[aditya14920251]

The management has indicated they are targeting that figure, earlier advised for FY27, to be delayed by 6-9 months now. Round it out to 1 year so FY28. Even that is ambitious as they need to grow 33% CAGR to hit that. Too optimistic!

Bottomline grew better than topline in FY25 due to better utilisations and higher growth in JVs. Utilisation levels across most parts are north of 75% and 110Cr of capex is expected in FY26. So, FY26 is going to be muted bottomline wise but could show signs of topline growth.

Gasket: Around 85%
Forging: Around 80%
Marelli Turbo Chassis Systems JV: 74%
Marugo JV:
Anti-vibration division: Around 82%
Hoses division: Around 90%

I would put this into the waitlist to watch for positive updates and then decide a course of action.

[Ballaji_Vijayan]

They got a big order. But still, 2000cr target seem farfetched.