Shriram Pistons & Rings has emerged as a standout performer in the stock market, recording a 157% gain over the past year and a staggering 512% growth over the last two years.
Past year, SPRL’s share price has surged from ₹802.95 to ₹2,067, reflecting the broader recovery in India’s automobile sector post-pandemic.
The rebound has been fueled by several factors, including economic growth, higher personal incomes, and a shift from public to private transportation, which boosted demand for CVs and SUVs. FY24 saw the highest-ever domestic sales of passenger vehicles in India, further driving demand for auto components.
SPRL’s Q4 FY24 results showcased a 12.6% year-on-year increase in revenue from operations, reaching ₹802 crore. For the full fiscal year, revenues climbed by 14.5% YoY to ₹3,351 crore.
The company’s profit after tax also showed significant growth, with a 30.2% YoY increase in Q4 FY24 to ₹120 crore, and a 51.2% rise for the full fiscal year, reaching ₹446 crore compared to ₹295 crore in the previous year.
SPRL’s management has forecasted a 5-7% growth in the two-wheeler and passenger vehicle segments for FY25. Although commercial vehicles are expected to remain flat initially, an uptick is anticipated starting in the third quarter, post-elections.
The company’s growth strategy includes investments like ₹700 million in a new plant in Coimbatore and ₹800 million in the Pithampur plant.. These new facilities are expected to be fully booked with client orders, particularly in the electric vehicle powertrain segment.
The company’s growth strategy extends to mergers and acquisitions, with two deals currently in the pipeline. Significant margin improvements have been achieved through various initiatives aimed at enhancing productivity, efficiency, capacity utilization, and cost management, including the adoption of renewable power sources.
SPRL has a strong presence in the aftermarket with over 1,200 touchpoints in India and a footprint in 45 countries, supported by a comprehensive servicing network. This extensive network positions SPRL well for growth in the EV sector, which is expected to see substantial expansion in the coming years.
India’s position as a significant beneficiary of global supply chain de-risking efforts, coupled with favorable domestic trends like rising premiumization across product segments and stricter regulatory standards, provides a strong growth outlook for the auto ancillary sector.
Government initiatives like the PLI Scheme and Faster Adoption and Manufacturing of Hybrid and Electric Vehicles are propelling the transition to electric vehicles.
The Indian automobile market is projected to grow at a compound annual growth rate of 6-8%, driven by a growing working population and expanding middle class. The sector contributes approximately 7.1% to the national GDP, up from 2.7% in 1992-93. India’s cost advantages and skilled workforce further bolster the auto and auto component industries.
On the EV front, the government’s focus on reducing emissions is increasing the shift towards electric cars. The market size for EV-based components is projected to rise significantly by 2030, supported by the Make in India initiative and PLI schemes.
