1. At a Glance
Rico Auto builds complex components for EVs, hybrids, and ICE vehicles. But while the machines run hot, the bottom line keeps stalling. Revenue is stable at ₹2,200 Cr+, yet FY25 profit is barely ₹21 Cr. Stock’s at ₹75.5, P/E >45, and the valuation’s feeling turbocharged—but is the engine tuned?
2. Introduction with Hook
Picture this: a supplier to global OEMs—doing precision machining for EVs, hybrids, and good old petrol guzzlers—revving up 545 Cr in quarterly sales but putting only ₹7 Cr into the profit garage.
That’s Rico Auto, where the top line accelerates, but the net profit rides a bicycle.
- Market Cap: ₹1,022 Cr
- FY25 Net Profit: ₹21 Cr
- ROE: 3.1%
- Dividend? A faint 0.79% yield
3. Business Model – WTF Do They Even Do?
Rico Auto makes engine, transmission, and structural components for:
- 2-wheelers & 4-wheelers
- Passenger cars & CVs
- EVs, hybrids, and ICE
Core products:
- Aluminium & ferrous casting
- Machining, assembly, tool design
- Supplied to OEMs (domestic + exports)
Segments:
- India, Europe, US
- Auto + now a foray into defense & railways (via DRDO deal)
4. Financials Overview
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue (₹ Cr) | 2,302 | 2,160 | 2,212 |
| EBITDA (₹ Cr) | 221 | 222 | 188 |
| Net Profit (₹ Cr) | 51 | 39 | 21 |
| EPS (₹) | 3.62 | 2.83 | 1.58 |
| ROE (%) | 3.6% | 2.83% | 3.11% |
| ROCE (%) | 10% | 8% | 7.02% |
Declining ROCE, falling margins… but an expensive P/E of 45x? The math needs recalibration.
5. Valuation – What’s This Stock Worth?
Let’s break this down:
- TTM EPS = ₹1.58
- Sector fair P/E range: 15–25x
- Fair Value Range = ₹24 to ₹40
At ₹75.5, the stock is trading at 45x, which assumes growth, margin lift, and a magical export recovery. Not for faint-hearted value investors.
6. What-If Scenarios
| Scenario | Outcome |
|---|---|
| ₹220 Cr Capex bears fruit | Better margin + higher capacity |
| DRDO/defense orders scale up | New revenue vertical, higher ASPs |
| Operating margin improves 1–2% | EPS can double |
| Raw material price spikes again | Margins toast, again |
7. What’s Cooking – News, Triggers, Drama
- 20% revenue growth guidance: Targeting ₹2,652 Cr in FY26
- Capex: ₹220 Cr for Hosur plant
- New Verticals: DRDO’s Baffle System licensing + 26% in Boond Renewables
- Export optimism: “Recovery on the cards”, per management
Yet, Q4FY25 PAT was just ₹7.3 Cr on ₹545 Cr sales. The circuit is overloaded somewhere.
8. Balance Sheet
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Equity (₹ Cr) | 690 | 721 | 730 |
| Borrowings (₹ Cr) | 754 | 688 | 697 |
| Fixed Assets (₹ Cr) | 1,019 | 1,070 | 1,110 |
| CWIP (₹ Cr) | 79 | 89 | 109 |
| Total Assets (₹ Cr) | 1,936 | 1,887 | 2,002 |
Debt is sticky. And rising capex means interest won’t cool soon.
9. Cash Flow – Sab Number Game Hai
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Cash from Operations (₹ Cr) | 160 | 247 | 183 |
| Cash from Investing (₹ Cr) | –228 | –102 | –125 |
| Cash from Financing (₹ Cr) | 77 | –153 | –57 |
| Net Cash Flow (₹ Cr) | 9 | –8 | +1 |
Cash flow still positive—but investing intensity remains high.
10. Ratios – Sexy or Stressy?
| Ratio | FY24 | FY25 |
|---|---|---|
| ROCE (%) | 8.0% | 7.02% |
| ROE (%) | 2.8% | 3.11% |
| Interest Coverage | Weak | Weak |
| OPM (%) | 10% | 9% |
| Debt/Equity | ~1.0x | ~1.0x |
Conclusion: It’s not bankruptcy—but it ain’t a balance sheet banger either.
11. P&L Breakdown – Show Me the Money
| Quarter | Sales (₹ Cr) | PAT (₹ Cr) | OPM (%) |
|---|---|---|---|
| Q1 FY25 | 539.7 | 5.6 | 8.0% |
| Q2 FY25 | 575.8 | 6.6 | 8.6% |
| Q3 FY25 | 551.7 | 1.8 | 8.2% |
| Q4 FY25 | 545.3 | 7.3 | 9.3% |
Steady sales. Volatile profits. And that Q3 faceplant… ouch.
12. Peer Comparison
| Company | P/E | ROCE % | ROE % | Sales (₹ Cr) | OPM % |
|---|---|---|---|---|---|
| Bosch | 56x | 21.1% | 15.5% | 18,087 | 12.8% |
| Bharat Forge | 63x | 12.1% | 11.2% | 15,123 | 17.8% |
| Uno Minda | 67x | 18.8% | 17.5% | 16,775 | 11.2% |
| Rico Auto | 45x | 7.0% | 3.1% | 2,212 | 9.0% |
Verdict: Rico is cheaper than peers, but way behind in profitability.
13. EduInvesting Verdictâ„¢
Rico Auto is a solid story, shaky screenplay, and a budget-limited production.
- Great infra.
- Cool product mix (even EV/defense-friendly).
- Revenue growing.
But low margins, high debt, and a steep valuation don’t add up.
Unless exports rebound big or DRDO deals scale fast, Rico remains more ‘Rico Pending’ than ‘Rico Rich’.
Metadata
– Written by EduInvesting Analyst | July 20, 2025
– Tags: Rico Auto, Auto Components, EV Suppliers, Precision Casting, DRDO Partnership
