🧐 At a Glance
Carraro India builds the backbone of tractors and earthmovers—axles, transmissions, and powertrains. Backed by strong 5-year profit CAGR of 45%, rising ROE (20.1%), and global pedigree (Italian parent Carraro Group), it’s quietly gaining horsepower. But with P/E at 30x and no dividends, should investors pump the clutch?
1. 🧲 WTF Do They Even Do?
Carraro India Ltd (CIL) makes:
- Transaxles, front & rear axles
- Transmission assemblies
- Hydraulic lifts & clutches
Main customers: Tractor & construction equipment OEMs.
Bonus: Exports account for ~30% revenue, primarily to EU & USA.
🛠️ Think of it as the Maruti gearbox that no one sees… but every machine needs.
2. 📊 Financials – The Good, The Better, and the Margins
💰 FY25 Highlights:
- Revenue: ₹1,792 Cr (2Y CAGR: ~7%)
- Net Profit: ₹86 Cr (up 41% YoY)
- EPS: ₹15.16
- OPM: 9% (was 5% in FY21)
| Metric | FY21 | FY23 | FY25 |
|---|---|---|---|
| Revenue | ₹1,062 Cr | ₹1,695 Cr | ₹1,792 Cr |
| Net Profit | ₹4 Cr | ₹47 Cr | ₹86 Cr |
| OPM | 5% | 6% | 9% |
| ROE | 0.78% | 8.23% | 20.1% |
🎯 OPM consistently climbing. ROE/ROCE finally in the green zone.
3. 📈 Valuation – Is It Reasonable or Ravi Shastri Drunk?
- CMP: ₹457
- P/E: 30.2x
- Book Value: ₹82.9 → P/B = 5.5x
- Market Cap: ₹2,600 Cr
- No Dividends since FY23 😒
🧮 Fair Value Range = 20–22x FY25 EPS of ₹15.16
👉 ₹303 – ₹333
💭 That means the stock is trading ~35–50% above FV range.
4. 🔥 What’s Cooking?
- 🏗️ Expansion complete; CWIP = ₹0 → Fully operational asset base
- 🛠️ New Italy-based orders via parent Carraro SpA
- 💸 ₹35 lakh GST DRC-01 notice (FY19) — not material
- 📢 Virtual analyst meets in July (good sign of transparency)
- 🔮 Capex cycle may pause, freeing up cash flows
5. 💼 Balance Sheet – Stronger Than a Tractor Chassis?
- Equity: ₹57 Cr
- Reserves: ₹415 Cr
- Debt: ₹176 Cr (down from ₹213 Cr last year)
- Total Assets: ₹1,113 Cr
- Debt/Equity: 0.42 → 🟢
📦 Asset-heavy, but not overleveraged. Capex phase winding down.
6. 💵 Cash Flow – Grease or Grime?
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| CFO | ₹72 Cr | ₹107 Cr | ₹95 Cr |
| Capex | ₹-64 Cr | ₹-84 Cr | ₹-74 Cr |
| FCF | ₹8 Cr | ₹23 Cr | ₹21 Cr |
| Net Cash Flow | ₹-4 Cr | ₹5 Cr | ₹-38 Cr |
⚠️ FY25 net cash flow dipped as debt repayments surged, but CFO remains strong.
7. 📏 Ratios – Sexy or Stressy?
| Metric | FY25 |
|---|---|
| ROE | 20.1% 🔥 |
| ROCE | 22.2% 💥 |
| OPM | 9% |
| Inventory Days | 83 |
| Debtor Days | 58 |
| Cash Conv. Cycle | 44 days ⛽ |
✅ Capital efficiency improving
❌ Working capital days rising → mild stress building
8. 📉 P&L Breakdown
- EBITDA: ₹166 Cr
- Depreciation: ₹43 Cr
- Interest: ₹22 Cr
- PBT: ₹116 Cr
- Tax: ₹30 Cr
- PAT: ₹86 Cr
🔍 Clean P&L – no abnormal items. Strong EBITDA momentum.
9. 🤼 Peer Comparison – Who Else Builds the Big Stuff?
| Company | CMP | P/E | ROE | OPM | Mcap |
|---|---|---|---|---|---|
| Carraro | ₹457 | 30x | 20% | 9% | ₹2,600 Cr |
| Uno Minda | ₹1,099 | 67x | 17% | 11% | ₹63,141 Cr |
| Endurance | ₹2,781 | 47x | 15% | 13% | ₹39,114 Cr |
| Schaeffler | ₹4,015 | 62x | 19% | 18% | ₹62,755 Cr |
| Bosch | ₹34,405 | 50x | 15.5% | 13% | ₹1L Cr+ |
📌 Carraro is a microcap version of Schaeffler with similar ROE but much lower scale.
10. 👥 Promoters & Shareholding
| Category | Mar 2025 |
|---|---|
| Promoters | 68.77% |
| DIIs | 17.03% |
| FIIs | 4.02% |
| Public | 10.18% |
🧩 Healthy promoter holding. No major pledge or dilution red flags.
🧠 EduInvesting Verdict™
Carraro India is a textbook example of “quiet compounding”. No media noise, no viral interviews. Just silent gearing up — literally.
But P/E >30x on a ₹2,600 Cr company with:
- No dividend
- Slow topline growth
- No clear moat vs bigger auto parts players
…makes it feel a bit ahead of itself.
🟢 If export growth continues, and OPM crosses double digits, it could justify current valuations.
➡️ Fair Value: ₹303–₹333
➡️ CMP: ₹457
➡️ Verdict: “Great machine, but don’t overpay for the gearbox.”
Tags: Carraro India Ltd, auto ancillaries, tractor axles, transmission stocks, smallcap auto parts, FY25 stock review, Italian MNC stocks
✍️ Written by Prashant | 📅 3 July 2025
