At a Glance
Federal-Mogul Goetze is India’s #2 piston ring maker with ~29% market share, zero debt, and a 5-year profit CAGR of 37%. It just closed FY25 with ₹170 Cr PAT, ₹1,800 Cr revenue, and a 16% OPM. Yet… no dividend. No buzz. No capex drama. Just pure compression-powered compounding.
1. 🏁 Introduction with Hook
Pistons are like desi uncles: always grumpy, low-key vital, and holding everything together.
But Federal-Mogul Goetze isn’t your average parts supplier.
While others were chasing EV narratives and ESG buzzwords, FM Goetze was delivering boring, mechanical profits — ₹59 Cr in FY22 → ₹170 Cr in FY25.
That’s a 3x profit jump in 3 years, with a sub-20 P/E.
Still thinking engine components are outdated?
2. 🏭 WTF Do They Even Do? (Business Model)
FM Goetze makes and supplies:
- 🛞 Pistons & Piston Rings
- 🧩 Engine components for ICE vehicles
- 🚗 Supplied to OEMs, 2W/3W/4W players, and exports
📌 Major customers include Maruti, Hero, TVS, Tata Motors, and global Tier-1s.
Started as a JV with Goetze Germany in 1954, now part of Tenneco Inc (US-based auto giant) post the Federal-Mogul acquisition.
💥 Second-largest in India’s organized piston market (~29% share)
3. 📊 Financials – Profit, Margins, ROE
| FY | Revenue (₹ Cr) | Net Profit (₹ Cr) | OPM % | ROE % |
|---|---|---|---|---|
| FY21 | 1,107 | 5 | 12% | ~0.5% |
| FY22 | 1,343 | 59 | 12% | 9.7% |
| FY23 | 1,634 | 107 | 13% | 11.6% |
| FY24 | 1,696 | 133 | 14% | 13.6% |
| FY25 | 1,800 | 170 | 16% | 14.0% |
🔥 3-year Profit CAGR = 43%
🧠 ROE catching up as profit grows faster than equity
🔧 Margins moving from 12% → 16% = massive operating leverage
4. 💸 Valuation – Is It Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| P/E (TTM) | 19.6 ✅ (Fair) |
| Price / Book | 2.5 ✅ |
| Market Cap / Sales | ~1.76x ✅ |
| ROE | 14% ✅ |
| OPM | 16% ✅ |
No fancy EV dreams.
No 80x valuations like Uno Minda.
Just boring, reasonable pricing.
Verdict: Cheap-ish in a world full of crack multiples.
5. 🛞 What’s Cooking – News, Triggers, Drama
- 🚫 No dividend despite ₹170 Cr profit = retention play?
- 🏗️ Registered office moved to Best Sky Tower, New Delhi – perhaps preparing for new phase?
- 🏭 No capex announcements, but strong cash reserves piling up
- 🔩 Rising engine-led demand in tractors, CVs, exports = steady growth
📢 Trigger Potential?
- If ICE stays relevant longer (CVs, tractors, gensets)
- Or if Tenneco boosts exports via India
6. 🧾 Balance Sheet – How Much Debt, How Many Dreams?
| Metric | FY22 | FY24 | FY25 |
|---|---|---|---|
| Debt (₹ Cr) | 9 | 8 | 3 |
| Reserves | 820 | 1,055 | 1,212 |
| Networth | 876 | 1,111 | 1,268 |
| Debt/Equity | 0.01 ✅ | 0.007 ✅ | 0.002 ✅ |
This company hasn’t taken a loan of substance since 2019.
Zero leverage, no dilution = shareholder-friendly
7. 💵 Cash Flow – Sab Number Game Hai
| FY25 (₹ Cr) | Amount |
|---|---|
| CFO (Ops) | ₹221 |
| CFI (Investments/Capex) | -₹17 |
| CFF (Financing) | -₹12 |
| Net Cash Flow | ₹192 |
🏦 Cash generation is solid.
Capex is minimal.
But still… no dividend payout. 🤔
8. 📐 Ratios – Sexy or Stressy?
| Metric | FY25 |
|---|---|
| ROE | 14.0% ✅ |
| ROCE | 19.0% ✅ |
| OPM | 16.0% ✅ |
| Debtor Days | 68 |
| CCC | 1 day 🔥 |
| Working Capital Days | 33 |
It’s not flashy, but it’s efficient.
ROCE + Negative WC + Cash flows = Durable moats
9. 💰 P&L Breakdown – Show Me the Money
| FY25 (₹ Cr) | Amount |
|---|---|
| Revenue | ₹1,800 |
| EBITDA | ₹284 |
| Depreciation | ₹87 |
| Interest | ₹6 |
| Other Income | ₹44 |
| PBT | ₹235 |
| PAT | ₹170 |
Profit quality is strong – aided by rising core EBITDA, not just other income.
10. 🧩 Peer Comparison – Who Else in the Game?
| Company | P/E | ROE (%) | OPM (%) | Mcap (₹ Cr) |
|---|---|---|---|---|
| Uno Minda | 66.1 | 17.5 | 11.2 | 61,953 |
| Endurance Tech | 49.0 | 15.5 | 13.4 | 40,546 |
| Bharat Forge | 61.0 | 12.3 | 17.8 | 61,405 |
| FM Goetze | 19.6 | 13.6 | 16.0 | 3,172 |
➡ OPM & ROE in-line with best
➡ P/E massively cheaper
➡ Size is smaller, but margins are real
11. 👨🔧 Misc – Promoters, Shareholding, History
- 🧑🔬 Promoter: Tenneco Inc (US MNC), holds 74.98%
- 🧑💼 No dilution in a decade
- 📉 Zero dividend since 2017
- 🧾 No pledging, no hype
- 📈 3-year stock CAGR = 27%
Also, no public interviews. No investor calls. Pure silent compounder mode. 🔇
12. 🎯 Fair Value (FV) Range
Assume FY26 PAT = ₹200 Cr
Apply reasonable P/E band = 18x – 24x
➡ Fair Market Cap = ₹3,600 Cr – ₹4,800 Cr
➡ Fair Value = ₹648 – ₹865/share
Current Price = ₹570 → Modestly undervalued
13. 🧠 EduInvesting Verdict™
“If Bosch is the BMW of auto ancillaries, FM Goetze is the Bajaj Boxer — no nonsense, just runs forever.”
✅ Debt-free
✅ 3x profit in 3 years
✅ 16% OPM
✅ Reasonable valuation
❌ No dividend
❌ Zero media coverage
Verdict:
🧱 One of the few midcap ancillaries where boring = beautiful.
📦 Keep in watchlist. Ignore at your own piston-pounding peril.
✍️ Written by Prashant | 📅 July 2, 2025
Tags: Federal-Mogul Goetze, Auto Ancillary Stocks, Pistons, Tenneco, ROE Stocks, Smallcap Compounders, EduInvesting
