Shares of the leading manufacturer of thermal products for automotive applications in India and the country’s largest air conditioning & thermal products company moved up by nearly 2 percent on exchanges during Thursday’s trading session.
The stock is currently trading at a discount, and here are some factors that could benefit retail investors considering investing in the company.
Price Movement
With a market cap of Rs. 3,609.8 crores, the shares of Subros Limited hit an intraday high at Rs. 575, up by around 2 percent, compared to its previous closing price of Rs. 565.2.
The stock has delivered positive returns of nearly 12 percent over a one-year period, while around 7 percent of negative returns in the last one month.
The stock hit its 52-week high at Rs. 825 on 28th August 2024, and compared to its closing price of Rs. 553.35, the stock is trading at a discount of nearly 33 percent.
Capacity Expansion & Management Guidance
The company has planned a capacity expansion at the Kharkhoda project, with a new facility already being planned, and the construction work is set to begin shortly.
Approval for an investment of nearly Rs. 150 crores for Phase 1 of the Kharkhoda project was secured in Q2 FY25. The management aims to achieve an EBITDA target of around 12 percent over the next few years, with consistent growth in key financial KPIs.
Improved margins are expected, driven primarily by localisation initiatives, operational efficiencies, and a favourable product mix. Subros will focus on aggressive cost-cutting measures across both fixed and variable costs to optimize efficiency.
Financial Performance & Market Position
Subros experienced a significant growth in its revenue from operations, showing a year-on-year increase of around 12.2 percent from Rs. 732 crores in Q3 FY24 to Rs. 821 crores in Q3 FY25.
Similarly, its net profit increased during the same period from Rs. 27 crores to Rs. 33 crores, indicating a marginal rise of nearly 22.2 percent YoY.
As of Q3 FY25, Subros maintains a steady market share in the passenger vehicle air conditioning market at 42 percent and a 54 percent market share in the Truck Aircon/Blower market.
New Product Developments & Other Business Segments
The launch of the EV Vitara is anticipated in Q1 FY26, with a significant increase in kit value compared to ICE vehicles, expected to be 1.8x to 2.5x higher.
The company has plans for localised production of components, aiming to reduce import content from 16-18 percent to approximately 10 percent over the next 2-3 years.
In addition, the company has secured a large railway tender worth Rs. 40 crores and expects to win more tenders in the upcoming quarters. The company is also actively involved in the EV bus market, with ongoing product development and collaborations with OEMs such as Ashok Leyland.
About the Company
Subros Limited is a joint venture with 36.79 percent ownership by the Suri family of India, 20 percent ownership by Denso Corporation, Japan, and 11.96 percent ownership by Suzuki Motor Corporation, Japan.
The company is the leading manufacturer of thermal products for automotive applications in India, in technical collaboration with Denso Corporation, Japan.
Subros is engaged primarily in the business of manufacturing and sale of thermal products for automotive and home airconditioning original equipment manufacturers.
Written by Shivani Singh
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