On the back of fourth quarter results, company has reported annual growth in operating income of 10.3%, thus crossing the milestone of Rs 500 cr in the process. This has resulted in growth of 33% in EBIDTA and 42% in Profit after Tax.
Company has established itself as a strong player in all business segments. It commands a leadership position in OEM segment with expanding customer / product line. It has established itself as a dominant player in Aftermarket segment also with deeper penetration. Expanding international business opportunities will further consolidate company’s position. Overall wide customer acceptance and reach and strengths in multiple business segments would ensure growth in sales as well as profitability.
OEM demand / sales continued the growth in the previous years and is likely to consolidate further in the next year. Being a market leader in the domestic MHCV clutch segment, catering to around 90% of domestic OEM demand, it has protected its market share over the years, by capturing new customers and by introduction of new products meeting new Euro / Bharat norms for continuously upgraded emission standards. Considering that production of MHCV has not yet reached the peak level achieved in FY 11-12 and proposed implementation of new emission norms, Company believes that OEM segment will continue to register a double digit growth in coming years. Industry sources indicate a growth in the range of 15- 18% in production of medium and heavy commercial vehicles during FY 16-17 and shall be driven by improving viability of fleet operators, replacement led demand and pre-buying ahead of BS-IV emission norms along with impact of ongoing reforms in the infrastructure, industrial and mining sectors. Anticipated legislative measures regarding scrapping of old vehicles and overloading would further push OEM production volumes. This coupled with new tie-ups / introduction of new products already in place should result in company registering a significantly higher growth than industry average.
Management believes Q4 performance has provided a very solid base and is poised for a very strong performance in FY 16-17 outpacing industry growth with better margins and profits. Predictions of good monsoon, upswing in domestic construction and infrastructure projects and increase in overall economic activity due to a positive agro focused budget would lead to significant upswing in performance. This coupled with new product business volumes for the entire year would see a significant growth in second half of the year which otherwise also contributes around 55-60% of annual revenues. Upswing in revenues coupled with aggressive cost control initiatives and reduction in working capital, etc. is expected to result in a significant increase in operating profits.
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