1. At a Glance
India’s largest independent axle maker. Strategic JV baby of Bharat Forge and Meritor. Solid client base, zero-nonsense balance sheet, and dividend payouts that make your FD look stingy. But is this auto component player spinning its wheels or gearing up for a new drive?
2. Introduction with Hook
If Tata Motors is the truck, Automotive Axles is the underdog gearbox grinding beneath, doing all the heavy lifting but getting none of the limelight. Founded in 1981, this Pune-based midcap may not be your usual cocktail-party stock pick—but here’s a spicy stat: EPS CAGR of 30% over 5 years. And a balance sheet so clean, SEBI might use it as a sample document.
- Key Stat #1: ROCE > 20% consistently for past 3 years
- Key Stat #2: Debt = almost extinct (₹16 Cr in FY25)
3. Business Model (WTF Do They Even Do?)
- Core: Manufacturing axles, brakes, and other critical parts for CVs (LCV, MCV, HCV)
- Segments: Trucks, buses, military, off-highway vehicles
- Clients: Ashok Leyland, Tata Motors, Mahindra, Daimler, Volvo-Eicher = basically the CV Avengers
- JV Structure: 35.5% Bharat Forge + 35.5% Meritor = 71% promoter hold = Indian-American blend
- USP: Largest independent axle manufacturer in India. Also 2nd largest brake system supplier.
They don’t sell sexy EVs. They keep the real wheels turning.
4. Financials Overview
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue (₹ Cr) | 2,324 | 2,229 | 2,078 |
| EBITDA (₹ Cr) | 257 | 246 | 220 |
| Net Profit (₹ Cr) | 162 | 166 | 156 |
| EPS (₹) | 107.2 | 110.0 | 102.9 |
| Dividend Payout (%) | 30% | 29% | 30% |
Insight: Flat to slightly declining topline due to cyclical CV weakness and plant closure. But margins and payout? Stable like a Volvo chassis.
5. Valuation
- Current Price: ₹1,809
- EPS (FY25): ₹102.9
- P/E Range: 12x (bear) – 22x (bull)
Fair Value Range:
- Stress Test (12x): ₹1,235
- Comfort Cruise (17x): ₹1,749
- High Torque Bull Case (22x): ₹2,264
Current pricing at 17.6x = somewhere in comfort cruise, pricing in moderate optimism.
6. What’s Cooking – News, Triggers, Drama
- Feb 2025: Shut down of Hosur plant. Potential cost-cutting or restructuring.
- Mar 2025: New MoU with Meritor HVS—customer transfers likely
- Low Capex = High Cash: CWIP is negligible, investments are up
- Credit Rating: Clean as a factory floor post-audit
- Concalls hint at: Expansion via new EV-agnostic axle platform
No scams, no SEBI notices, just good old manufacturing drama (like plant closures and MoUs).
7. Balance Sheet
| Item | FY24 | FY25 |
|---|---|---|
| Equity | ₹15 Cr | ₹15 Cr |
| Reserves | ₹861 Cr | ₹967 Cr |
| Borrowings | ₹22 Cr | ₹16 Cr |
| Total Assets | ₹1,230 Cr | ₹1,357 Cr |
Observations:
- Debt is nearly wiped out
- Book value per share: ₹650
- Asset-light model but with growing investments (₹77 Cr in FY25)
Basically, the finance head deserves a medal.
8. Cash Flow – Sab Number Game Hai
| Segment | FY24 | FY25 |
|---|---|---|
| CFO | ₹260 Cr | ₹128 Cr |
| CFI | ₹-182 Cr | ₹-94 Cr |
| CFF | ₹-56 Cr | ₹-59 Cr |
| Net Cash Flow | ₹22 Cr | ₹-24 Cr |
Narrative:
Cash from ops halved YoY, but still healthy. Investing into subsidiaries or joint ventures likely driving cash usage. Nothing alarming, unless you’re allergic to growth capex.
9. Ratios – Sexy or Stressy?
| Ratio | FY24 | FY25 |
|---|---|---|
| ROCE | 27% | 23% |
| ROE | 17% | 16.7% |
| OPM | 11% | 11% |
| Cash Conversion Cycle | 52 days | 59 days |
| Debt/Equity | 0.03 | 0.02 |
Consistent efficiency, lean ops, near-zero leverage. If this were a dating app, it’s the “works out, cooks, and has no loans” profile.
10. P&L Breakdown – Show Me the Money
| Year | Revenue (₹ Cr) | Net Profit (₹ Cr) | EPS | OPM |
|---|---|---|---|---|
| FY23 | 2,324 | 162 | 107.2 | 11% |
| FY24 | 2,229 | 166 | 110.0 | 11% |
| FY25 | 2,078 | 156 | 102.9 | 11% |
Sales dropped slightly but profitability held strong. This is what margin defense looks like.
11. Peer Comparison
| Company | CMP (₹) | P/E | ROCE | ROE | OPM |
|---|---|---|---|---|---|
| Schaeffler | ₹4,180 | 64.3 | 25.6% | 19.2% | 18.4% |
| Uno Minda | ₹1,119 | 68.8 | 18.8% | 17.5% | 11.2% |
| Endurance | ₹2,695 | 45.8 | 18.2% | 15.5% | 13.4% |
| Bharat Forge | ₹1,231 | 58.4 | 13.1% | 12.3% | 17.8% |
| Auto Axles | ₹1,809 | 17.6 | 22.5% | 16.7% | 11.0% |
Conclusion:
Auto Axles gives mid-cap value with efficiency metrics that rival giants. Dirt-cheap compared to peers on valuation metrics.
12. Miscellaneous – Shareholding, Promoters
- Promoter Stake: Solid 71.04%, consistent
- FIIs: Barely exist at 0.65%
- DIIs: Holding 13.8%, stable
- Public Float: 14.5%—still a niche stock
- Shareholders Count: ~28K — quietly gaining traction
Bonus: 30% dividend payout makes it a stealthy income stock.
13. EduInvesting Verdict™
Automotive Axles is the kind of stock your CA uncle loves: clean books, consistent margins, no hype, no drama, and a P/E lower than your broadband bill. With consistent earnings, high ROCE, zero debt, and a promoter pedigree of Bharat Forge + Meritor, it’s a CV-cycle play that’s quietly doing its job.
Sure, topline has dipped due to macro-auto slowdown and one plant closure, but this company is built like the trucks it serves: strong, low-maintenance, and always ready for the next route.
If you’re into manufacturing moats and valuation sanity, this stock belongs on your watchlist.
Metadata
– Written by EduInvesting Team | July 17, 2025
– Tags: Automotive Axles, Bharat Forge, Auto Components, Dividend Stocks, Value Investing, Indian Manufacturing, Smallcap Stocks, Axles, Commercial Vehicles, EduInvesting Premium
