Why Talbros Automotive Share Price is Rising

Talbros Automotive, an auto ancillary firm, is under the limelight ever since ace investors Dolly Khanna and Vijay Kedia showed interest in the company.

Dolly Khanna, as we know, is renowned for choosing undervalued midcaps and smallcaps that are not well known. She has been trading in equities since 1996.

Vijay Kishanlal Kedia, on the other hand, is an Indian investor and trader based out of Mumbai. His company - Kedia Securities - is the largest shareholder (after the promoter) in several listed companies.

Kedia has been involved in the Indian stock market since the age of 19. He has been described by many as a 'market master'.

Data revealed that ace investor Vijay Kedia bought stake in auto ancillary during the December 2021 quarter and Dolly Khanna invested in the company, a year ago in the December 2020 quarter.

According to the latest shareholding pattern of Talbros Automotive Components, Dolly Khanna increased her stake in the company by 0.47% during the June 2023 quarter.

Both, Kedia and Khanna upped and raised their stakes in the firm when the company's share price was under pressure.

However, things have turned out quite well for Talbros Automotive Component in the past couple of months. In one month, its share price has rallied 16%.

Let's find out why...

#1 Strong financial performance

FY23 was a big year for Talbros Automotive. During the year under review, its total revenue stood at Rs 6.5 billion (bn) as against Rs 5.9 bn in the year ago period, a growth of 12%. This was supported by a rising order book.

The gasket division was a cash cow and a market leader in the year under review. It continued to get more and more orders from domestic original equipment manufacturers (OEMs) as well as global OEMs.

For FY23, the company's profit after tax (PAT) came in at Rs 560 million (m) as against Rs 450 m, a growth of 24% on a YoY basis. The net profit grew on the basis of softening input prices.

In the year gone by, the company received multi-year orders over Rs 10 bn across its business divisions, product segments and joint ventures (JVs).

The Board of Directors also declared a final dividend of Rs 2 per share. The total dividend for the year under review stood at Rs 3 per equity share.

#2 Sectoral tailwinds

In the financial year 2022-23, the automotive industry experienced a significant boost in production and sales, largely due to increased economic activity and mobility.

According to industry data, a total of 25.9 m vehicles were produced between April 2022 and March 2023 compared with 23 m units in the previous year. Sales improved across most automotive segments, including passenger cars, commercial vehicles, and tractors, resulting in a 20% increase on a YoY basis.

Domestic sales of passenger vehicles increased by 27%, reaching over 3.9 m passenger cars, the highest ever in our country, up from 3.1 million units in FY22. The commercial vehicle segment had the second-highest domestic sales with an increase from 7.2 lakh to 9.6 lakh units, representing a growth of 34%.

The growth was particularly strong in the passenger vehicle segment and it is expected to continue in the next coming years.

The demand for commercial vehicles was boosted by government initiatives aimed at building infrastructure such as roads, highways, and ports.

As a company that is very strong in these two segments, Talbros Automotive continued to perform well and it gained more market share.

#3 Strong growth prospects

It's no surprise that Talbros Automotive's gasket division is one of its strongest segments.

The gasket division has shifted focus towards heat shields while constantly diversifying the segment portfolio and securing exports.

In this gasket division, for the first time in FY23, its heat shield division crossed about Rs 200 m of revenues, and it is expected to reach about Rs 900 m by the financial year 2027.

The company is working on increasing exports from the current level of 25% to 35% over the next 3-4 years. It also expects domestic demand to be very strong in the coming years.

In the forging division, the company aims to leverage its capability to convert castings into forgings and increase its focus on electric vehicles.

The company is also strengthening its EV portfolio. It secured orders from leading OEMs both domestically and globally. In the said segment, the company expects to raise revenues of Rs 2.5 bn by FY27. The growth in the EV segment will be driven by heat shields.

The management has also said that they plan to double revenue to Rs 22 bn by FY27. This will help EBITDA margins to go above 15-16% by FY27.

How shares of Talbros Automotive have performed recently

In the past one month, Talbros Automotive share price has gained 16.6%. In 2023 so far, the stock is up 28.8%.

And in the past one year, it has rallied 41.9%.

Talbros Automotive shares touched a 52-week high of Rs 770 on 4 July 2023 and a 52-week low of Rs 380.1 on 29 March 2023.

About Talbros Automotive

Talbros Automotive is engaged in the business of manufacturing gaskets and forging that are supplied to original equipment manufacturers (OEMs) and the aftermarket.

The company has majority share of over 50% in India in the gaskets division. It has aggressively invested in BS VI technology and is also focusing on post coating lines which leads to lower imports and higher cost savings.

The company was incorporated in 1956 and is part of the Talbros group promoted by Mr Pran Talwar and family.

It has four gasket production facilities - two at Faridabad in Haryana, and one each at Pune in Maharashtra, and Sitarganj in Uttarakhand.

To know more about the company, check out Talbros Automotive's financial factsheet and quarterly results.

You can also compare Talbros Automotive with its peers:

Talbros Auto vs Banco Products

Talbros Auto vs Gabriel India

Talbros Auto vs Suprajit Engineering

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