Hi Friends - Market has started to recover from it recent lows and last week have seen quite a lot of stock recovering by 15-20% from its lows levels.
My next stock which i am analysing today is GNA Axles.
About the company:
GNA Axles Limited (GAL) is a Jalandhar based company, incorporated in the year 1993. GAL is the flagship company of the GNA group, set-up in the year 1946 for manufacturing of auto components for commercial vehicles, tractors and offhighway equipment. The company is engaged in the business of manufacturing and supplying axle shafts and spindles (ranging from 2 kg to 150 kg) to OEMs and Tier-1 suppliers. GAL has its manufacturing facilities located in Hoshiarpur, Punjab with an installed capacity of ~4 million pieces per annum, as on March 31, 2018.
Products
(i) Rear axle shaft
Rear axle shaft is the primary product of the Company which contributes to 82.73 % of its revenues and 77.22% of components manufactured in FY18. The Company has a large variety of axle shaft s ranging from 1.5 kg to 65 kg and with a capacity to manufacture up to 165 kg. Our long-standing global presence is owed to the experience in development and manufacture of this product.
(ii) Spindles
Spindles GNA manufactures spindles for on-highway vehicular segments. Spindle is a part of axle housing assembly of an automobile. Spindles contributed to approximately 12.01% of its FY18 sales and 12.58% of components manufactured in FY18.
(iii) Other shaft: GNA manufactures other shaft s including drive shaft, power take-off shaft s, hydraulic lift shaft s and transmission shaft s. These shaft s are a part of transmission assembly of an automobile. Other shaft s contribute 5.26 % of its FY18 revenues and 10.20% of FY18 components manufactured.
Customer base:
GNA’s customers have been an integral part of the 25 years of success story. The Company works in tandem with the customer’s requirements across the automobile segment and delivers solutions as per their needs. Today 100% of the customers have been with the Company for over 15 years. The Company’s customers include global OEMs and tier-I suppliers such as Dana Limited (USA, Mexico and Brazil), John Deere (Brazil), Kubota Corporation (Japan) and Meritor HVS AB (Sweden, Italy, Brazil, USA, China and Australia), as well as leading Indian OEMs and tier-I suppliers such as TAFE, International Tractors Ltd, Escorts Limited, Axles India Ltd, Automotive Axles Limited and Mahindra & Mahindra Ltd.
Growth Drivers:
One of the major factors driving the growth of the rear axle market is increasing global automotive production. Further, the increasing need for high capacity lift ing applications is fuelling demand for the rear axle market. Moreover, logistics operations of heavy weight equipment such as electrical machines and new vehicles is expected to increase the adoption of rear axles in the near future. OEMs forming strategic alliances with manufacturing equipment providers to cope with the demand from vehicle manufacturers is a major trend identifiEDd in the global automotive rear axle market.
During the year they successfully installed new capacities and also debott lenecked our production facilities.
The effect of this has been seen in their sales and revenue and should only improve and consolidate their position with time to come.
For the year 2018-2019 they are focusing on the following parameters to achieve our targets:
1) Increasing our capacities to meet the enhanced demand to increase their market share in both Domestic and Export Markets.
2) To Strengthen their operational efficiencies.
3) To penetrate into newer markets and new customers. they are looking to further strengthen their relationship with our Customers both in the Tractor segment and Commercial Vehicle Segment in India and overseas and are also working to establish their foot print in the new segment i.e SUV Axle Shaft .
As they are operating in the Auto Component Industry, their performance is dependent on the fortunes of the auto Industry. Indian Automobile sector is on a growth path and is poised to grow on the back of growing Incomes in the rural areas and the growth impetus given by the Government to the Rural Economy. The Commercial Vehicle segment is also poised to perform well due to increased infrastructure and economic activity in the country. The commercial vehicle industry in North America and Europe is faring well and the growth of the same is also expected to continue in the future years also.
Risk:
(i) Any downtrend in the abovesaid sectors can hamper the growth momentum of the Company. To mitigate this risk, the Company has decided to venture into a new segment of SUV Axle Shaft. The Construction of the factory shed is complete for the said Unit and the machineries have started arriving and the management expects to start the commercial production from the said unit in the fiscal 2019-20.
(ii) GNA has certain key customers which are core for its business and its growth and while the business with key customers has increased, the Company, as in the past, has been trying to mitigate the risk of its dependence on certain customers by making its customer base broad and also diversifying its product portfolio.
Financial performance:
- The Company posted a net operating revenue growth of 30.53% this year up from 51340.96 lacs in FY2016-17 to 67013.52 lacs in FY2017-18.
- The Company posted an EBITDA growth of 27.08% this year up from 8334.78 lacs in FY2016-17 to 10591.96 lacs in FY2017-18.
- The Company reported a PAT growth of 71.92% this year, up from 2959.73 lacs in FY2016-17 to 5088.43 lacs in FY2017-18.
- With the overall support and good performance by team GNA the production and the sales volumes touched new peaks couples with the improvement in all spheres. The operating revenues grew by 30.53 % touching 67013.52 Lacs and the net profi t jumped 71.92 % to cross the 5000.00 lacs milestone. The production volumes increased on the back of increased demand for all the product segments of the Company both globally and domestically.
- Their Export volumes growth was on the led by robust demand of the Commercial Vehicles in Europe and North America which are our key export markets. As India sold a record number of tractors touching 7,11,000 units in the year 2017-2018 helped the Company to grow its sales domestically as well.
Please note that this is a educational website . I am not a SEBI registered analyst and my views might be biased. I have not got any consideration from the company to write this report not do i have any holding/interest in the company in last 30days.
My next stock which i am analysing today is GNA Axles.
| Current Price as of 18-12-2018 | 357.6 | |||
| Market Capitalization (Cr) | 767.49 | |||
GNA Axles Limited (GAL) is a Jalandhar based company, incorporated in the year 1993. GAL is the flagship company of the GNA group, set-up in the year 1946 for manufacturing of auto components for commercial vehicles, tractors and offhighway equipment. The company is engaged in the business of manufacturing and supplying axle shafts and spindles (ranging from 2 kg to 150 kg) to OEMs and Tier-1 suppliers. GAL has its manufacturing facilities located in Hoshiarpur, Punjab with an installed capacity of ~4 million pieces per annum, as on March 31, 2018.
Products
(i) Rear axle shaft
Rear axle shaft is the primary product of the Company which contributes to 82.73 % of its revenues and 77.22% of components manufactured in FY18. The Company has a large variety of axle shaft s ranging from 1.5 kg to 65 kg and with a capacity to manufacture up to 165 kg. Our long-standing global presence is owed to the experience in development and manufacture of this product.
(ii) Spindles
Spindles GNA manufactures spindles for on-highway vehicular segments. Spindle is a part of axle housing assembly of an automobile. Spindles contributed to approximately 12.01% of its FY18 sales and 12.58% of components manufactured in FY18.
(iii) Other shaft: GNA manufactures other shaft s including drive shaft, power take-off shaft s, hydraulic lift shaft s and transmission shaft s. These shaft s are a part of transmission assembly of an automobile. Other shaft s contribute 5.26 % of its FY18 revenues and 10.20% of FY18 components manufactured.
GNA’s customers have been an integral part of the 25 years of success story. The Company works in tandem with the customer’s requirements across the automobile segment and delivers solutions as per their needs. Today 100% of the customers have been with the Company for over 15 years. The Company’s customers include global OEMs and tier-I suppliers such as Dana Limited (USA, Mexico and Brazil), John Deere (Brazil), Kubota Corporation (Japan) and Meritor HVS AB (Sweden, Italy, Brazil, USA, China and Australia), as well as leading Indian OEMs and tier-I suppliers such as TAFE, International Tractors Ltd, Escorts Limited, Axles India Ltd, Automotive Axles Limited and Mahindra & Mahindra Ltd.
Growth Drivers:
One of the major factors driving the growth of the rear axle market is increasing global automotive production. Further, the increasing need for high capacity lift ing applications is fuelling demand for the rear axle market. Moreover, logistics operations of heavy weight equipment such as electrical machines and new vehicles is expected to increase the adoption of rear axles in the near future. OEMs forming strategic alliances with manufacturing equipment providers to cope with the demand from vehicle manufacturers is a major trend identifiEDd in the global automotive rear axle market.
During the year they successfully installed new capacities and also debott lenecked our production facilities.
The effect of this has been seen in their sales and revenue and should only improve and consolidate their position with time to come.
For the year 2018-2019 they are focusing on the following parameters to achieve our targets:
1) Increasing our capacities to meet the enhanced demand to increase their market share in both Domestic and Export Markets.
2) To Strengthen their operational efficiencies.
3) To penetrate into newer markets and new customers. they are looking to further strengthen their relationship with our Customers both in the Tractor segment and Commercial Vehicle Segment in India and overseas and are also working to establish their foot print in the new segment i.e SUV Axle Shaft .
As they are operating in the Auto Component Industry, their performance is dependent on the fortunes of the auto Industry. Indian Automobile sector is on a growth path and is poised to grow on the back of growing Incomes in the rural areas and the growth impetus given by the Government to the Rural Economy. The Commercial Vehicle segment is also poised to perform well due to increased infrastructure and economic activity in the country. The commercial vehicle industry in North America and Europe is faring well and the growth of the same is also expected to continue in the future years also.
Risk:
(i) Any downtrend in the abovesaid sectors can hamper the growth momentum of the Company. To mitigate this risk, the Company has decided to venture into a new segment of SUV Axle Shaft. The Construction of the factory shed is complete for the said Unit and the machineries have started arriving and the management expects to start the commercial production from the said unit in the fiscal 2019-20.
(ii) GNA has certain key customers which are core for its business and its growth and while the business with key customers has increased, the Company, as in the past, has been trying to mitigate the risk of its dependence on certain customers by making its customer base broad and also diversifying its product portfolio.
Financial performance:
- The Company posted a net operating revenue growth of 30.53% this year up from 51340.96 lacs in FY2016-17 to 67013.52 lacs in FY2017-18.
- The Company posted an EBITDA growth of 27.08% this year up from 8334.78 lacs in FY2016-17 to 10591.96 lacs in FY2017-18.
- The Company reported a PAT growth of 71.92% this year, up from 2959.73 lacs in FY2016-17 to 5088.43 lacs in FY2017-18.
- With the overall support and good performance by team GNA the production and the sales volumes touched new peaks couples with the improvement in all spheres. The operating revenues grew by 30.53 % touching 67013.52 Lacs and the net profi t jumped 71.92 % to cross the 5000.00 lacs milestone. The production volumes increased on the back of increased demand for all the product segments of the Company both globally and domestically.
- Their Export volumes growth was on the led by robust demand of the Commercial Vehicles in Europe and North America which are our key export markets. As India sold a record number of tractors touching 7,11,000 units in the year 2017-2018 helped the Company to grow its sales domestically as well.
| Profit & Loss | ||||
| Report Date | Mar-15 | Mar-16 | Mar-17 | Mar-18 |
| Sales | 430.07 | 508.52 | 513.41 | 670.14 |
| Operating Expense | 369.67 | 426.17 | 432.96 | 567.09 |
| Raw Material Cost | 293.4 | 330.34 | 322.75 | 458.16 |
| Change in Inventory | 14.89 | 12.83 | 4.21 | 33.14 |
| Power and Fuel | 30.01 | 36.96 | 40.64 | 47.82 |
| Other Mfr. Exp | 19.29 | 18.05 | 19.14 | 21.49 |
| Employee Cost | 18.47 | 23.72 | 27.12 | 31.85 |
| Selling and admin | 23.16 | 29.41 | 26.78 | 39 |
| Other Expenses | 0.23 | 0.52 | 0.74 | 1.91 |
| Operating Profit | 60.4 | 82.35 | 80.45 | 103.05 |
| Operating Margin (%) | 14.0% | 16.2% | 15.7% | 15.4% |
| Other Income | 0.57 | 0.42 | 2.9 | 2.87 |
| Depreciation | 22.98 | 27.17 | 23.94 | 24.8 |
| Interest | 17.26 | 16.29 | 12.52 | 7.09 |
| Profit before tax | 20.74 | 39.31 | 46.89 | 74.03 |
| Net profit | 21.6 | 25.96 | 29.6 | 50.88 |
| Quarters | ||||
| Report Date | Dec-17 | Mar-18 | Jun-18 | Sep-18 |
| Sales | 167 | 204.52 | 212.58 | 227.25 |
| Expenses | 140.14 | 175.01 | 180.96 | 191.37 |
| Operating Profit | 26.86 | 29.51 | 31.62 | 35.88 |
| Operating Margin (%) | 16.1% | 14.4% | 14.9% | 15.8% |
| Other Income | 0.42 | 0.67 | 0.13 | 0 |
| Depreciation | 6.2 | 6.26 | 7.94 | 8.62 |
| Interest | 1.34 | 1.85 | 2.3 | 1.8 |
| Profit before tax | 19.74 | 22.07 | 21.51 | 25.46 |
| Net profit | 12.68 | 16.45 | 14 | 16.24 |
| BALANCE SHEET | ||||
| Report Date | Mar-15 | Mar-16 | Mar-17 | Mar-18 |
| Equity Share Capital | 15.17 | 15.17 | 21.47 | 21.47 |
| Reserves | 97.64 | 123.14 | 275.44 | 319.96 |
| Borrowings | 153.22 | 138.63 | 117.29 | 142.32 |
| Other Liabilities | 160.43 | 169.59 | 163.04 | 198.54 |
| Total | 426.46 | 446.53 | 577.24 | 682.29 |
| Net Block | 159.33 | 147.31 | 131.74 | 190.69 |
| Capital Work in Progress | 0.42 | 0.05 | 2.53 | 0 |
| Investments | 0 | 0.01 | 0.01 | 0.01 |
| Other Assets | 266.71 | 299.16 | 442.96 | 491.59 |
| Receivables | 121.85 | 162.08 | 182.27 | 235.47 |
| Inventory | 91.94 | 91.37 | 110.29 | 153.64 |
| Cash & Bank | 0.42 | 0.67 | 72.45 | 26.09 |
| others | 52.5 | 45.04 | 77.95 | 76.39 |
| Total | 426.46 | 446.53 | 577.24 | 682.29 |
| CASH FLOW: | ||||
| Report Date | Mar-15 | Mar-16 | Mar-17 | Mar-18 |
| Cash from Operating Activity | 27.01 | 74.47 | -90.3 | 59.71 |
| Cash from Investing Activity | -14.46 | -16.38 | -7.96 | -78.36 |
| Cash from Financing Activity | -12.65 | -58.36 | 97.97 | 18.71 |
Please note that this is a educational website . I am not a SEBI registered analyst and my views might be biased. I have not got any consideration from the company to write this report not do i have any holding/interest in the company in last 30days.
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