1. At a Glance
ZF Steering is a niche, precision-driven auto component manufacturer supplying steering systems mainly to commercial vehicles. But with high P/E, low ROE, and some family drama (read: lawsuits and capex splurges), is this Pune-based steering whisperer actually moving forward or just making noise?
2. Introduction with Hook
Imagine a Formula 1 car… with bullock cart steering. That’s your logistics nightmare if ZF Steering disappears.
- Market Cap: ₹1,047 Cr
- Stock P/E: 83.2 (Yes, really.)
- ROE: 2.72% (Oh, really?)
ZF Steering Gear is what happens when German tech meets desi manufacturing… but somewhere the engine of growth misfired. Despite decades in the game and global linkages (ZF Friedrichshafen AG, Germany), growth and margins remain modest — but the ambitions? Oh, they’re turbocharged.
3. Business Model (WTF Do They Even Do?)
ZF Steering designs, manufactures, and assembles:
- Hydraulic Power Steering Systems (Ball and Nut Integral type)
- Mechanical Steering Systems (Worm and Roller)
- Used in: Commercial vehicles, buses, and tractors.
- Major clients: Tata Motors, Ashok Leyland, Mahindra, and international OEMs.
They are a Tier-I auto supplier, with 67% promoter holding (Munot family), and now—drumroll—they’re diversifying into aluminium extrusion and electric equipment via subsidiaries like DriveSys and Metacast Auto.
So basically, it’s steering, plus a side of “let’s try everything else.”
4. Financials Overview
| Year | Revenue (₹ Cr) | Net Profit (₹ Cr) | OPM % | EPS (₹) |
|---|---|---|---|---|
| FY23 | 450 | 25 | 13% | 27.05 |
| FY24 | 478 | 44 | 11% | 48.14 |
| FY25 | 494 | 13 | 11% | 16.44 |
Notes:
- Sales are growing… very slowly.
- FY25 Profit tanked — due to lawsuit charges? Subsidiary burn?
- OPM stuck at 11–13%. In auto world, that’s… meh.
- EPS volatility = mood swings of the finance team.
5. Valuation
Fair Value Range: ₹800 – ₹950
- P/E Method: Even if we generously assume a normalized EPS of ₹25, applying a sector average P/E of 30 (not 83, calm down), we get ~₹750.
- Book Value Method: BV ~₹514, CMP/BV ~2.25x — fair for auto ancillary.
- DCF? Too boring. It’s a slow-growth, low-debt, cash-surplus company. Let’s not kid ourselves.
Conclusion: Overvalued on optics, moderately valued if FY26 is strong.
6. What’s Cooking – News, Triggers, Drama
- Mega Project Approvals: DriveSys & Metacast Auto going full EV-component mode.
- Lawsuit: ₹200 Cr trademark battle with ZF Friedrichshafen AG (yes, the German ex-partner).
- Capex Madness: Subsidiary expansions = Rs 200 Cr raise approved.
- Other Income: ₹20.7 Cr. That’s the buffer zone when ops are wobbly.
Investor takeaway: Core business flat. Subsidiaries = hope and risk rolled into one.
7. Balance Sheet
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Reserves | ₹410 Cr | ₹449 Cr | ₹457 Cr |
| Borrowings | ₹43 Cr | ₹77 Cr | ₹100 Cr |
| Fixed Assets + CWIP | ₹165 Cr | ₹235 Cr | ₹260 Cr |
| Investments | ₹147 Cr | ₹134 Cr | ₹156 Cr |
| Total Assets | ₹512 Cr | ₹594 Cr | ₹636 Cr |
Key Points:
- Borrowings jumped 2x in 2 years.
- CWIP & Fixed Assets ballooning = capex party.
- Still asset-heavy, cash-light.
8. Cash Flow – Sab Number Game Hai
| FY | CFO (₹ Cr) | CFI (₹ Cr) | CFF (₹ Cr) | Net Flow |
|---|---|---|---|---|
| 2023 | ₹49 | -₹63 | ₹12 | -₹2 |
| 2024 | ₹35 | -₹52 | ₹29 | ₹11 |
| 2025 | ₹39 | -₹65 | ₹16 | -₹10 |
Verdict: Ops cash is positive but capex is burning the wallet. Net cash flow? Bipolar disorder.
9. Ratios – Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROCE | 8% | 10% | 6% |
| ROE | 3% | 6% | 2.72% |
| OPM | 13% | 11% | 11% |
| P/E | 44x | 24x | 83x |
Rating: These are not sexy. These are “you up?” texts from a stock trying to stay relevant.
10. P&L Breakdown – Show Me the Money
| Year | Sales (₹ Cr) | EBITDA (₹ Cr) | PAT (₹ Cr) | EPS (₹) |
|---|---|---|---|---|
| FY23 | 450 | 57 | 25 | 27.05 |
| FY24 | 478 | 52 | 44 | 48.14 |
| FY25 | 494 | 53 | 13 | 16.44 |
Insight: FY25 PAT nosedived even as revenue grew. Margin pressure + lawsuit + new plants = combo punch.
11. Peer Comparison
| Company | CMP ₹ | P/E | ROE % | Sales ₹ Cr | OPM % |
|---|---|---|---|---|---|
| Bosch | 36,525 | 53 | 15.55 | 18,087 | 12.77 |
| Uno Minda | 1,073 | 65 | 17.56 | 16,774 | 11.17 |
| Bharat Forge | 1,215 | 57 | 12.27 | 15,123 | 17.79 |
| ZF Steering | 1,155 | 83 | 2.72 | 494 | 10.76 |
Conclusion: ZF’s margins are okay-ish. But scale, growth, and ROE? Tiny wheels next to peers’ monster trucks.
12. Miscellaneous – Shareholding, Promoters
| Stakeholder | Mar 2025 |
|---|---|
| Promoters | 66.93% |
| Public | 33.06% |
| FIIs/DIIs | Basically absent |
- Subsidiaries: Metacast Auto, DriveSys Systems — both now operational.
- Litigation: ₹200 Cr lawsuit with their German ex-friend.
- New Plants: Aluminium extrusion + electric kits = trying to join the EV bandwagon.
13. EduInvesting Verdict™
ZF Steering is a quirky mix: part old-school Tier-I auto supplier, part dreamer with EV plans and lawsuit battles. The core business is steady but unspectacular, and the valuation is punchy. What really drives future value is whether subsidiaries scale up without steering into debt potholes.
This one’s not your average smallcap — it’s a story of engineering ambition, brand battles, and family enterprise trying to evolve beyond the steering column.
Metadata
– Written by EduInvesting | 12 July 2025
– Tags: ZF Steering Gear, Auto Components, Munot Family, EV Capex, Lawsuit, Metacast, DriveSys, Auto Ancillary India, Smallcap Stocks, Value Trap, NBFC steering gear
