1. At a Glance
Sharda Motor Industries isn’t your average auto ancillary stock. With juicy margins, near-zero debt, a surprise bonus issue, and a dividend yield higher than your savings account, this one’s got auto enthusiasts and investors revving. Oh, and did we mention 43% 5Y profit CAGR? No cap.
2. WTF Do They Even Do?
Sharda Motor is into:
- Emission Control Systems (read: BS-VI magic pipes)
- Suspension Systems
- Soft-top Canopies (Jeep fans, holla!)
- Roof Systems and Axle Assemblies
Basically, they manufacture what carmakers don’t want to — the hard, messy, low-glamour stuff. Which ironically makes them sticky with OEMs.
🛠️ Major Customers:
- Tata Motors
- M&M
- Maruti Suzuki
- Renault Nissan
3. Financials Overview – The Gearbox of Growth
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 1,737 | 2,255 | 2,700 | 2,809 | 2,837 |
| Net Profit (₹ Cr) | 79 | 161 | 205 | 295 | 312 |
| OPM (%) | 7% | 10% | 10% | 13% | 14% |
| ROCE (%) | 24% | 39% | 38% | 39% | 39% |
| ROE (%) | 13.2% | 27.1% | 26.4% | 29.7% | 29.7% |
🧠 TL;DR: Everything’s accelerating — profits, margins, returns. And still trading at sub-20 P/E? Rare breed.
4. Valuation – Is It Cheap, Meh, or Crack?
- Current Price: ₹1,053
- P/E (TTM): 19.3
- Book Value: ₹188 → P/B ~5.6x
- Market Cap: ₹6,043 Cr
🧮 Fair Value Range (EduCalc™):
- EPS FY25: ₹54.4
- Apply 18x to 22x (peer avg: Uno Minda 67x, Endurance 47x)
→ FV Range: ₹980 – ₹1,200
📌 CMP is fair, leaning toward undervalued if margin expansion continues.
5. What’s Cooking – Triggers, News & Masala
- 🚨 Bonus Issue (1:1) — June 2025. Stock split effect incoming.
- 🏭 New Plant at Chakan — Commercial ops from July 2025. Expect volume boost.
- 💸 Buyback in 2024 — At ₹1,800! (CMP now ₹1,053 😬)
- 🔍 IT Dept Raid in May 2023 — Survived. Cleaned up. Moved on.
6. Balance Sheet – How Much Debt, How Many Dreams?
- Debt? Barely there. ₹52 Cr borrowings on ₹1,774 Cr assets.
- Networth (FY25): ₹1,079 Cr
- Reserves have tripled in 5 years.
🥇 Credit rating? CRISIL has been giving them A-rated love.
7. Cash Flow – Sab Number Game Hai
| Year | CFO (₹ Cr) | FCF (Approx) | Comments |
|---|---|---|---|
| FY25 | ₹271 Cr | ₹200+ Cr | Healthy ops, capex ongoing |
| FY24 | ₹370 Cr | ₹160 Cr | High EBITDA conversion |
| FY23 | -₹200 Cr | NA | Working capital spike |
🧼 Free Cash Flow Positive ✔️
🚿 Capex funded internally ✔️
🏦 No dilutions for cash ✔️
8. Ratios – Sexy or Stressy?
| Metric | FY25 |
|---|---|
| ROCE | 39% |
| ROE | 29.7% |
| OPM | 14% |
| Dividend Yield | 1.54% |
| Payout Ratio | 30% |
Basically, it’s what Fund Managers call a “cash-generating machine.” Except it’s not available on your ICICI PMS brochure (yet).
9. P&L Breakdown – Show Me the Money
- Sales growing at 27% CAGR (5Y)
- Profits growing at 43% CAGR (5Y)
- Margins expanded from 7% → 14% in 3 years
- EPS has jumped from ₹13 (FY21) to ₹54 (FY25)
🧂 Bonus: Other income is meaty — ₹83 Cr in FY25. Not just core, even treasury is playing smart.
10. Peer Comparison – How Do They Stack Up?
| Company | ROCE (%) | OPM (%) | P/E | CMP |
|---|---|---|---|---|
| Sharda Motor | 39 | 14 | 19.3 | ₹1,053 |
| Uno Minda | 19 | 11 | 67.3 | ₹1,099 |
| Endurance Tech | 18 | 13 | 47.5 | ₹2,796 |
| Bosch | 21 | 12.8 | 52.7 | ₹35,930 |
| Bharat Forge | 13 | 17.8 | 62.3 | ₹1,314 |
👑 Sharda leads on ROCE and valuation — a rare combo.
11. Misc – Promoters, Shareholding, Drama
- 👑 Promoters: 64.3% (Down from 73.2% in 2023)
- 🏦 DIIs now hold 11.7% — up from zero in FY23
- ✋ Retail reduced to 21.7%
- 🎁 Bonus + Buyback in 12 months → Clearly shareholder friendly
📈 No signs of pledged shares, fraud, or audit notes.
12. KMP & Management Vibe Check
- CMD: Ajay Relan — Veteran, been with it since inception
- CFO: Financials show he isn’t sleeping
- Plant Heads — Especially the new Chakan ops — could be key margin lever
📞 Concalls suggest focus on margin expansion + localization
13. EduInvesting Verdict™
✅ Debt-free
✅ Margin expansion story
✅ Smart management (dividends, buybacks, expansion)
✅ Cheap vs peers
❌ Promoter holding drop (watch this)
Verdict:
🚘 “This isn’t a carmaker… it’s the engine under the hood of every auto rally. And it just hit turbo.”
Keep it in the watchlist. Not saying race it… but maybe don’t ignore it when it zooms past.
✍️ Written by Prashant | 📅 6 July 2025
Tags: Sharda Motor, Auto Ancillary Stocks, Bonus Issue 2025, High ROCE Stocks, Low PE Stocks, Auto Components India, Chakan Plant News, EduInvesting, Fundamental Analysis
