🟨 At a Glance
Divgi Torqtransfer Systems Ltd – India’s largest EV transmission manufacturer – is an engineering marvel that just can’t seem to grow its sales or margins. Despite being “debt-free” and “niche,” it’s burning operational leverage like a newbie driver on clutch. But is this just a gear slip or a full-blown breakdown?
1. 🪝 Introduction with Hook
Imagine being the gearbox guy in an EV world where everyone wants electric vehicles – but your revenues are going reverse. That’s Divgi Torq for you.
In a space where demand for transmission solutions should be cruising, Divgi is kinda… stuck in neutral.
2. ⚙️ WTF Do They Even Do?
- India’s largest maker of EV transmissions. Also dabbles in:
- Manual Transmission (MT)
- Automatic Transmission (AT)
- Transfer Cases & Dual-Clutch Solutions
- Clients include top OEMs (confidential, but think Tata, Mahindra, and global JV partners)
- Supplied components for AWD, commercial vehicles, agri-vehicles, and electric SUVs
- Owns R&D facilities + in-house testing + backward integration
Sounds fancy. Now let’s pop the hood on those numbers.
3. 💰 Financials – Profits, Margins, ROE, Growth
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | ₹271 Cr | ₹253 Cr | ₹219 Cr |
| PAT | ₹51 Cr | ₹40 Cr | ₹24 Cr |
| OPM | 28% | 21% | 17% |
| ROE | 8.2% | 6.4% | 4.1% |
| 3-Year Sales CAGR | -2% | ||
| 3-Year PAT CAGR | -19% |
➡️ Everything is going downhill except the company brochure.
4. 💸 Valuation – Is It Cheap, Meh, or Crack?
- Current Price: ₹631
- P/E: 79x
- P/B: 3.2x
- Market Cap: ₹1,928 Cr
📉 Valuation Check:
| Metric | Value | Comment |
|---|---|---|
| FV Range | ₹410–₹510 | Based on 20–25x sustainable EPS of ₹20 |
| EPS TTM | ₹7.98 | Falling faster than EV battery prices |
| PEG | NA | Because “G” is missing |
So yeah… 79x earnings for a negative CAGR business? That’s not premium, that’s premium-delusion.
5. 🔥 What’s Cooking – News, Triggers, Drama
- 🧑🏫 Investor meets every month (Ambit, IDBI, etc.)
- 🛞 Expanding R&D to cater to global AT/EV transitions
- 🧊 No capex explosion yet, which is… good?
- 🤫 No major OEM wins or export deals announced recently
TLDR: No trigger. No story. Just meetings.
6. 🧾 Balance Sheet – How Much Debt, How Many Dreams?
- Debt: Almost zero (₹1 Cr)
- Cash Reserves: ~₹50 Cr+
- Reserves: ₹581 Cr
- Assets: ₹660 Cr
✅ Cleanest balance sheet on the block. But also the slowest compounder.
7. 💸 Cash Flow – Sab Number Game Hai
| Year | CFO | FCF |
|---|---|---|
| FY23 | ₹41 Cr | Negative (Capex) |
| FY24 | ₹32 Cr | Positive |
| FY25 | ₹35 Cr | Moderate |
So the biz throws cash, but reinvests without clear RoCE benefits. Net cash flow in FY25? Negative.
8. 📊 Ratios – Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROCE | 15% → 6% | ||
| ROE | 8.2% → 4.1% | ||
| OPM | 28% → 17% | ||
| ROA | 3.7% | ||
| Debt/Equity | 0.01 |
Everything except the leverage is deteriorating. Profitability is on a diet, margins are in therapy, and growth is MIA.
9. 💥 P&L Breakdown – Show Me the Money
- Sales fell from ₹271 Cr (FY23) → ₹219 Cr (FY25)
- Other Income of ₹21 Cr saved the P&L from a total wipeout (FY25)
- EBITDA margins down from 28% to 17%
- Net profit halved over 2 years
Basically: The only thing increasing is the “Other Income” section. Which is code for FD returns.
10. ⚔️ Peer Comparison – Who Else Is in the Game?
| Company | P/E | OPM | ROCE | Sales Growth |
|---|---|---|---|---|
| Schaeffler | 61x | 18% | 25.7% | 🔼 |
| Bosch | 50x | 12.7% | 21.1% | 🔼 |
| Bharat Forge | 61x | 17.8% | 13.1% | 🔽 |
| Divgi Torq | 79x | 17% | 5.7% | 🔽🔽 |
➡️ Valuation > All peers. Growth < All peers. Margin < All peers.
Basically, it’s playing in the Premier League with third division stats.
11. 📉 Misc – Promoters, Shareholding, Suspense
| Holder | % Mar ‘25 |
|---|---|
| Promoter | 60.56% |
| DIIs | 25.89% |
| FIIs | 1.76% |
| Public | 11.80% |
📊 21,653 shareholders – and none seem happy post listing.
12. 📦 Fair Value Range – ₹410 to ₹510
🧮 Based on 20–25x sustainable earnings of ₹20/share
(assuming margins bounce and sales revive, which they haven’t… in years)
🎯 Lower Bound: ₹410 (risk-off, no growth)
🎯 Upper Bound: ₹510 (if margins hit 20% and EV orders come back)
Current Price ₹631 = 🚨 Overheating Alert unless miracle triggers arrive.
13. 🧠 EduInvesting Verdict™
⚠️ India’s EV gearbox king is missing one gear: G for Growth.
- Debt-free? ✅
- Profitable? 🤷♂️
- Growing? ❌
- Attractive valuation? 😂
Until sales start growing and margins revive, this stock is like a fancy car… parked in neutral.
✍️ Written by Prashant | 📅 July 4, 2025
Tags: Divgi Torq, EV Transmission, Auto Components, Smallcap Stocks, Screener Analysis, EduInvesting, Niche Auto, Dividend Stocks, Indian Manufacturing, Valuation Metrics
