⚡ At a Glance
Him Teknoforge is a tractor and auto component stock with a boring name but a spicy backstory—multi-decade survival, decent growth, and some dangerously pledged promoter shares. At ₹223, it’s trading below book, has grown profits 25% CAGR in 5 years, but still yields only a 5% ROE. Hidden gem or dust under a crankshaft?
1. 🧲 Introduction with Hook
Remember that one engineering kid in college who quietly aced practicals, had average grades, but never failed a subject?
That’s Him Teknoforge.
They make gears, axles, shafts, and heat-treated precision parts. Sounds dull, right?
But somehow, their stock is up 38% CAGR in 5 years, even as margins remained under 10% and 50.9% of promoter holding is pledged.
So why are smart investors nibbling? Let’s grease this engine and take a peek.
2. 🏭 Business Model – WTF Do They Even Do?
🛠️ Core Product: Transmission gears, shafts, differential assemblies, axle components
🚜 Target Clients: Tractors, CVs, and aftermarket players
🧰 Brand: KAG (don’t worry, nobody knows what it stands for either)
🌎 Markets: India + small overseas exposure via exports and OEMs
🧪 Capabilities: Forging, machining, heat treatment, gear cutting
Think of them as a low-key mini-Bharat Forge, but without the NATO contracts or Elon Musk tweets.
3. 📈 Financials – Profit, Margins, ROE, Growth
Despite staying under most radars, HTF has grown quietly but decently.
| Metric | FY20 | FY23 | FY25 |
|---|---|---|---|
| Revenue (₹ Cr) | 222 | 405 | 403 |
| PAT (₹ Cr) | 3 | 11 | 10 |
| OPM (%) | 11% | 9% | 9% |
| ROE (%) | 2% | 5% | 5% |
| EPS (₹) | ₹4.13 | ₹13.58 | ₹10.30 |
📈 Profit grew at 25% CAGR over 5 years.
💤 But margins stayed ~9%—industrial insomnia.
4. 💰 Valuation – Is It Cheap, Meh, or Crack?
- CMP: ₹223
- Book Value: ₹233 → trading at 0.97x book
- P/E: 21.6x
- Market Cap: ₹211 Cr
- TTM EPS: ₹10.3
📊 Fair Value Estimate
Assume normalized PAT of ₹10–12 Cr
Assign P/E of 12–15x → FV range: ₹125–₹180
At ₹223, you’re paying for growth that’s not visible on paper, unless the JV with Borghi Assali turns into a BHEL moment.
5. 🍿 What’s Cooking – News, Triggers, Drama
- 🤝 JV with Borghi Assali to sell hydraulic steering axles
- 📈 Promoter increased stake from 47.8% to 50.8% last quarter
- 🔐 But… 51% of promoter holding still pledged (ouch)
- 🛞 Positive media coverage around “Make in India” narrative
- 🤫 LLP subsidiary inactive → no consolidated results
It’s trying to reinvent… but is that a steering wheel or just another gear slipping?
6. 📉 Balance Sheet – How Much Debt, How Many Dreams?
| Year | Debt (₹ Cr) | Reserves (₹ Cr) | D/E |
|---|---|---|---|
| FY20 | 130 | 147 | 0.88x |
| FY25 | 150 | 218 | 0.69x |
🧨 Debt has stayed flat while equity crawled up.
No dilution. But also… no aggressive deleveraging.
7. 💵 Cash Flow – Sab Number Game Hai
| Year | CFO (₹ Cr) | Capex | Net Cash Flow |
|---|---|---|---|
| FY23 | ₹29 | ₹16 | Negative |
| FY24 | ₹42 | ₹32 | Still negative |
| FY25 | ₹4 | ₹23 | Barely hanging |
Yes, free cash flow is poor. And the business is working capital heavy, with CCC of 247 days in FY25. That’s not lean—it’s industrial molasses.
8. 📐 Ratios – Sexy or Stressy?
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROCE (%) | 11% | 9% | 9% |
| ROE (%) | 5% | 5% | 5% |
| Debtor Days | 48 | 52 | 69 |
| Inventory Days | 234 | 275 | 270 |
Everything’s just okay-ish.
A C+ student in the school of auto ancillaries.
9. 💸 P&L Breakdown – Show Me the Money
Q4FY25 (Mar 2025):
- Revenue: ₹106.6 Cr
- OPM: 9.15%
- PAT: ₹4.13 Cr
- EPS: ₹4.36
Sequentially, profit doubled. But last 4 quarters look like this:
- Q1: ₹2.17 Cr
- Q2: ₹2.11 Cr
- Q3: ₹1.35 Cr
- Q4: ₹4.13 Cr
Basically: sleepwalk → stub toe → jump scare → shrug.
10. 🛞 Peer Comparison – Who Else in the Game?
| Company | CMP | P/E | ROE | OPM |
|---|---|---|---|---|
| Bharat Forge | ₹1,310 | 62x | 12.3% | 17.8% |
| Uno Minda | ₹1,095 | 67x | 17.6% | 11.1% |
| Samvardhana | ₹155 | 28.8x | 12.5% | 9.2% |
| Him Teknoforge | ₹223 | 21.6x | 4.9% | 9.4% |
Clearly, HTF is valued far cheaper. But so is its mojo.
11. 🧾 Misc – Shareholding, Promoters, Governance
- Promoter stake: 50.86%
- Pledged: 50.9% 😬
- Public holding: 48.93%
- FIIs: 0.2% (Someone’s watching…)
- Shareholders: 5,426 (microcap crowd)
📌 Retail loves it. FIIs are nibbling. Promoters are mortgaged to the hilt. Who wins?
12. 🧑⚖️ EduInvesting Verdict™
Him Teknoforge is like a Maruti 800 from the 90s—still running, still useful, still kinda cute.
✅ Trades below book
✅ Profitable every year for a decade
✅ Decent 5Y profit CAGR
❌ 51% pledge is a red flag
❌ ROE stuck under 5%
❌ Working capital heavier than your ex’s emotional baggage
Unless the Borghi JV actually delivers traction, this might remain a value trap disguised as a metal bender.
💸 Fair Value Range: ₹125 – ₹180
It’s not overpriced… but it’s not understood either.
✍️ Written by Prashant | 📅 July 7, 2025
Tags: Him Teknoforge, Auto Ancillary Stocks, Forging Companies, SME Stocks, Value Trap, Borghi JV, Tractor Components, Smallcap Auto
