🧵 At a Glance
Tube Investments of India (TII), once known for its bicycles, is now a diversified force in auto components, electric motors, and vision tech. In 5 years, its stock is up 4.5x — but profits peaked a year ago. With margins shrinking and valuation stretching like a Hero cycle tube, is this compounder losing air?
🏗️ 1. From Pedals to Powertrains: The Business Evolution
Let’s start with a glow-up story so dramatic even Netflix would be jealous.
- Old TII (Pre-2018): Bicycles, tubes, chains. Mostly traditional engineering.
- New TII (Post-2018):
- Electric motors & industrial systems (31% of FY25 revenue)
- Metal-formed products
- Optics, TMT bars, truck body building
- Investments in CG Power, Cellestial E-Mobility, and more
Basically, from being the Decathlon uncle, TII turned into Elon Musk’s distant Tamil cousin.
📊 2. Financial Recap: From Margin Party to Profit Hangover
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 6,083 | 12,447 | 14,964 | 16,890 | 19,465 |
| Net Profit (₹ Cr) | 305 | 991 | 1,325 | 1,723 | 1,054 |
| OPM (%) | 11% | 12% | 13% | 12% | 10% |
| EPS (₹) | 14.85 | 39.85 | 49.48 | 62.08 | 34.82 |
🧨 Growth exploded in FY22–24, thanks to operating leverage and industrial tailwinds. But FY25?
- Profit down 39%
- EPS collapsed by 44%
- Margins shrunk to 10%
Looks like the “multi-engine growth story” lost a few engines mid-air.
🧮 3. Valuation: Is the PE Ratio a Typo?
At ₹2,850, Tube Investments trades at:
- P/E: 81x
- P/B: 9.96x
- Dividend yield: 0.12% (basically dry air)
⚠️ Compare that to:
- Bharat Forge: 60x
- Uno Minda: 63x
- Schaeffler India: 59x
- Median Auto Ancillary P/E: ~27x
So why this madness?
Because the market assumes:
“CG Power + TII + optics + EV = next Tata Sons”
But unless profits bounce back, that logic is basically:
“The vibes are immaculate.”
📦 4. Balance Sheet & Cash Flows: Safe but Squeezed
- Debt: ₹703 Cr (reduced steadily from ₹1,972 Cr in FY21)
- ROCE: 22% in FY25 vs 32% peak in FY23
- Cash Flow from Ops: ₹1,213 Cr (healthy again after FY24 dip)
Not alarming, but also not the “all engines firing” story we had hoped for. Plus:
- Free cash flows being pumped into capex & subsidiaries
- Shareholder return? A whopping ₹3.48 dividend.
Thanks, I’ll buy a Rasna.
🧠 5. The CG Power Influence: The Real Growth Driver?
TII owns ~58% of CG Power, which has become the real crown jewel. But:
- Standalone TII profits have plateaued
- Consolidated profits rely on CG’s growth
- CG Power valuation is baked into TII’s price
So if CG sneezes, TII stock catches a cold.
📉 6. FY25 Results Breakdown: The Warning Signs
| Quarter | Net Profit (₹ Cr) | OPM % |
|---|---|---|
| Q1 FY25 | ₹274 | 10% |
| Q2 FY25 | ₹317 | 12% |
| Q3 FY25 | ₹299 | 10% |
| Q4 FY25 | ₹158 | 7% |
That’s a 60% drop in quarterly profit from Q2 to Q4.
Even with higher sales, margins cracked like cheap alloy wheels. EPS fell to ₹2.40 in Q4.
🧵 7. EduFair Value Estimate: Time to Deflate the Hype?
Let’s be honest — this is a quality business. But the price?
We assume:
- Long-term sustainable EPS: ₹45–55
- Fair P/E range: 30–40x (due to diversification, CG Power play, but margin concerns)
🎯 Fair Value Range: ₹1,350 – ₹2,200
At ₹2,850, you’re paying for a clean balance sheet and vibes. Profits? Meh. Growth? Paused. Margins? Dropping.
You’re not buying a Hero cycle.
You’re buying a carbon-frame cycle that’s leaking air and still priced like a Harley Davidson.
🧵 TL;DR: The Thread that Might Snap
- ✅ Diversified biz model, strong history, CG Power advantage
- ⚠️ FY25 profit down 39%, Q4 disaster
- 🚨 Valuation at 81x earnings is “Designer Sherwani” pricing for basic white kurta performance
If Tube wants to justify this price, it needs a margin comeback, not just press releases about EVs and optic sensors.
Tags: Tube Investments of India, CG Power, Auto Ancillary Stocks, TII Stock Analysis, Indian Multibagger Stocks, FY25 Results, Engineering Sector, PE Ratio Overvaluation, EduInvesting 5-Year Recap
✍️ Written by Prashant | 📅 June 20, 2025
