The company that manufactures aluminum castings for automotive, defense, and energy sectors has seen a 28% increase in its shares over the last 12 months.
Alicon Castalloy Ltd (ACL), formerly Enkei Castalloy Limited, specializes in manufacturing automotive castings. The company primarily produces aluminum alloy die castings for the automotive industry in India.
Additionally, ACL’s product range extends to the non-automotive sector. The company exports its products to countries like the USA and the UK.
Alicon Castalloy Limited serves various industries, including automotive, aerospace, and defense. In the defense sector, the company manufactures components for tanks, such as critical parts for artillery, missile systems, and other military applications.
ACL also supports the defense industry’s supply chain by producing components essential for the manufacturing and assembly of defense tanks and provides aluminum alloy wheels for these tanks.
Originally established as Enkei Castalloy Ltd, ACL was a joint venture between Pegasus Castalloy Ltd, an Indian company that has been producing cast-aluminum automotive components since 1990, and Enkei Corporation of Japan, one of the world’s largest alloy wheel manufacturers.
The Company has a diverse clientele, such as Maruti Suzuki Limited, Honda Siel Cars Limited, Tata Motors, Bajaj Auto Limited, Hero Honda Motor Industries, and Honda Scooter and Motorcycle Company among others. Its international customer base includes John Deere, Behr Group, GE, Knorr Bremse, ZF Group, and GWK Group.
In the last six months, shares of Alicon Castalloy Limited have surged by 18%, and over the preceding 12 months, the growth has amounted to 29%.
The company primarily earns 75% of its revenue from the domestic market and 25% from international markets. Additionally, in FY24, 94% of its revenue was was attributed to auto sales, with the remaining 6% attributed to non-auto sales.
In FY24, Alicon Castalloy Limited showcased robust financial performance, with a Gross profit of Rs. 803.52 crore, marking a notable 17% year-on-year increase. This improvement in Gross margin, which rose by 233 basis points to 50.6%, can be attributed to enhanced value addition in the product mix and the stabilization of input prices at lower levels.
Additionally, the company’s EBITDA surged by 27% YoY to Rs. 199.11 crore in FY24, resulting in an EBITDA margin of 12.7%. Adjusting for an ESOP Cost absorption of Rs. 14.4 crore, the EBITDA would reflect a more significant increase of 36% YoY, with a margin of 13.7%.
Looking ahead, Alicon Castalloy Limited plans to execute capital expenditure (capex) of approximately ₹400 crore during the fiscal years 2024 to 2026, a move expected to be financed through a prudent blend of internal accruals and debt.
The company’s revenue witnessed a substantial 31% year-on-year growth, climbing from ₹319 crore in Q4FY23 to ₹419 crore in Q4FY24. Simultaneously, the Net profit soared by an impressive 112%, from Rs 9.7 crore to Rs 20.54 crore during the same period.
Furthermore, as per the latest shareholding pattern, the company’s promoters retain a 55.71% stake, while foreign and domestic institutional investors collectively hold a 9.37% stake.
Besides, Alicon Castalloy Limited serves various sectors, including defense (providing aluminum alloy wheels), the energy sector (supplying gravity die-casted components), and the locomotive industry (offering braking system components).
Alicon Castalloy Limited operates across various segments in the aluminium casting business, offering a wide range of products including cylinder heads, intake manifolds, engine support brackets, motor housings, battery housing, and compressor housings.
The company’s price-to-earnings (P/E) ratio stands at 26.06, significantly lower than the industry average of 46.79, indicating that the company’s shares are trading at a discount. The company also has an earnings per share (EPS) of 38.04.
At 9:30 a.m., On Monday, Alicon Castalloy Limited shares were trading at Rs 1,147.55 per share, up 2.36 % on the Bombay Stock Exchange from the previous close price. The company has a market capitalization of Rs 1,854 crore.
Written by Omkar Chitnis
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