ABOUT THE COMPANY -
The company is a distinguished automotive ancillary company, specializing in High-Pressure Die Casting, as well as the precision Machining of both Ferrous and Non-Ferrous materials and Induction heating and quenching. Founded by Mr. Sriramulu Anandan, a seasoned professional with extensive expertise in Pressure Die Casting and Machining Processes, their business model is firmly rooted in a B2B approach, catering to leading entities in the automotive components sector.
PRODUCTS -
Their product portfolio encompasses a diverse range of Automobile components, including *Engine Mounting Support Brackets, Transmission Mounts, Fork Shift and Housing, Armature – Steering Wheel, Electrical Connectors, YFG Base Frame (Right-hand drive side/Left-hand drive side), Housing, Top Cover, and more.
Thaai Casting Limited’s manufacturing unit is located at Tiruvallur, Tamil Nadu.The facility is equipped for high-pressure die casting, precision machining of ferrous and non-ferrous materials, and induction heating and quenching4.
Here’s a detailed look at the manufacturing unit’s capabilities:
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High-Pressure Die Casting: The facility has an installed capacity of 2,500 tons for high-pressure die casting. This process involves forcing molten metal into a mould cavity under high pressure, enabling the production of complex metal parts with high dimensional accuracy and a good surface finish…
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Machining: Thaai Casting has an average installed capacity of 85% for machining of ferrous and non-ferrous metals. The company uses CNC lathes for turning operations, and vertical machining centres (VMC) for milling, drilling, and tapping… The average capacity utilisation for machining is 61%.
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Induction Heating and Quenching (IHQ): The facility has an installed capacity of 85% for induction heating and quenching. This process is used to harden ferrous materials… The capacity utilisation for IHQ is 60%.
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Gas Nitriding: Thaai Casting has one of India’s largest gas nitriding furnaces, with a capacity of up to 13 tons per batch. This furnace is used for surface hardening of components. The gas nitriding facility is a new vertical, separate from existing production lines.
BALANCE SHEET -
INCOME STATEMENT -
CASH FLOW STATEMENT -
On Feb 2024, they got on indian stock market through an IPO.
The objects of the Issue are: -
- To meet out the Capital Expenditure(to meet the capex goals of 37.5 crs machinery purchase)
- To meet out the General Corporate Purposes
- To meet out the Issue Expenses
Thaai Casting Limited is strategically expanding its operations into the wind energy sector, with a particular focus on gas nitriding as a key process. The company aims to become a significant supplier of components for wind power generation.
WIND ENERGY SECTOR -
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Component Focus: The company is focusing on supplying components for the main gearbox of wind turbines, not the blades. This includes large, complex parts that require precision engineering and machining.
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Partnerships: The company has a long-term agreement with a German customer, Flender, for the wind business. They are also approved by other OEMs such as GE, Vestas, and Nordex9.
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New Facility: They have acquired land to construct new facilities for their subsidiary, focusing on gas nitriding, gear shaping, and planetary carrier manufacturing.
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Investment: Thaai Casting plans to invest â‚ą70-75 crores in wind energy. The new capacity from this investment is expected to begin production in three months, but full wind sector revenue will come in FY 2027.
Gas Nitriding-
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Surface Treatment: Gas nitriding is a thermochemical surface treatment process that diffuses nitrogen into the surface of metal components, creating a hard, wear-resistant layer. This process enhances the components’ resistance to wear, corrosion, and fatigue.
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Large Capacity: Thaai Casting has one of India’s largest gas nitriding furnaces, capable of processing up to 13 tons per batch.
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Revenue Generation: The company anticipates generating around INR 4.5 to 5 crore in revenue per year from each furnace, with an annual revenue of INR 12 crore from all three furnaces combined, though management has revised this estimate to INR 9.2-9.3 crore annually in 2026-2027
PROMOTERS REMUNERATION -
PEER COMPARISION-
THAAI CASTING LTD -
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Sales/Revenue Growth:
n FY24, the company’s total income reached INR 90.69 crores, representing a year-over-year (YoY) growth of 84.64%.
The company is targeting a 50% to 60% year-on-year revenue growth. -
Profit (PAT) Growth:
The company’s Profit After Tax (PAT) increased by 171.95% in FY24, reaching INR 13.70 crores. PAT grew from INR 5.04 crores in FY23 to INR 13.70 crores in FY24
But when it comes to converting PAT into cash flow, the company has shown poor performance. It has not been able to convert its profits into CFO, mainly due to
- high trade recievables
- high inventories
- high short term loans and advances
RED FLAGS !! (worth a look)
- high related party transactions (they purchase 9crs goods from there promoters company and also sell them 3crs good)
- the industry is fragmented with small and medium size players
- no entry barriers
- High competition (the promoter also mentioned in the conference call that it will be difficult to improve margins in the future).
- negative cash flow from operation
- loans taken from promoter of 3.15cr and interest rate not mentioned anywhere
- there is a sudden increase in the other expense section (rise in electricity and labour charges) just think the fixed assets increased by 50% and these charges increased by 675%…!!!
DISCLAIMERS-
This is my first post on the forum, and I’m excited to share my thoughts on this value stock. I would love to hear your opinions and feedback. Big thanks to @pranavpallod12 , who taught me everything I know — truly grateful for his guidance!
"Invested "