Founded in 1956, the company is an automotive manufacturing leader delivering high-quality products globally, with a strong focus on detail and client relationships.
The company offers a comprehensive product portfolio through its joint ventures, including sealings, NVH solutions like heat shields, plastic components, forged and machine components, chassis, suspension, BIW components, anti-vibration components, and hoses.
Talbros Automotive Components Ltd serves a wide range of industries, including automotive (passenger and commercial vehicles, agricultural equipment, two and three-wheelers, off-road vehicles), as well as industrial segments.
The company’s versatility and adaptability across various sectors demonstrate its commitment to excellence. By partnering with renowned global players and state-of-the-art manufacturing facilities, Talbros Automotive Components Ltd consistently delivers superior products, solidifying its reputation in the market.
Price Action
In Wednesday’s trade, the shares of Talbros Automotive Components Limited are trading at Rs. 334, up by 13% from its previous close of Rs. 294. The stock currently holds a market cap of Rs. 2,058 crore.
Valuation
Talbros Automotive Components Limited is currently trading at a P/E ratio of 20.90 compared to the industry P/E of 30.16. This shows the stock to be trading at a cheaper valuation as compared to the industry.
Portfolio
Talbros Automotive Components Limited has a strong product portfolio consisting of BIW components, anti-vibration components, chassis, suspension, etc.
Business Segments
The company’s business is primarily divided into four segments namely:
- TALBROS SEALING DIVISION
- TALBROS FORGING DIVISION
- MARELLI TALBROS JV
- TALBROS MARUGO JV
Clientele Base
Talbros’ top 5 customers in FY24 and H1 FY25 are as follows:
1. Maruti Suzuki India: accounts for 14% of revenue in FY24 and 16% in H1 FY25, making it the largest customer for Talbros.
2. TATA Motors: contributes 9% of revenue in both FY24 and H1 FY25, solidifying its position as the second-largest customer.
3. Bajaj Auto: makes up 6% of revenue in FY24 and 8% in H1 FY25, maintaining its position as the third-largest customer.
4. Jaguar Land Rover: represents 6% of revenue in FY24 and 8% in H1 FY25, demonstrating its importance to Talbros.
5. TATA CUMMINS: accounts for 6% of revenue in FY24 and 7% in H1 FY25, rounding out the top 5 customers for the company.
Future Outlook
Gasket Business: Growth and Diversification Plans
Talbros aims to achieve a 13% compound annual growth rate (CAGR) in its gasket business, targeting revenues of Rs. 700 crores by FY27. A key driver of this growth will be the heat shield business, which is projected to generate approximately Rs. 90 crores annually.
The company is also increasing its focus on exports, with the export share expected to rise from 10% in FY18 to around 22% by FY27. Additionally, Talbros plans to diversify its segment portfolio, with passenger vehicles (PVs) projected to grow from 2% of revenue in FY18 to approximately 11% by FY27.
Forging Business: Expanding Reach and Focus on EVs
Talbros is targeting a 23% CAGR in its forging business, aiming for Rs. 500 crores in revenue by FY27. A significant aspect of this growth will be the increasing focus on electric vehicles (EVs), which is expected to generate Rs. 70 crores by FY27, growing at a robust 60% CAGR.
The company is also expanding its export markets, with exports projected to account for about 63% of total revenue by FY27, up from 47% in FY18. Additionally, revenues from agriculture and off-highway sectors are expected to rise from 37% in FY18 to around 43% in FY27.
Expansion in EV segment
- Supplying parts for Plug-in Hybrid Electric Vehicles to OEMs globally
- Marelli Talbros is working on new RFQs for several Indian and global OEMs to support the development of future EVs
- Marelli Talbros supplies critical suspension and components to EVs
CAPEX Plans
Talbros Automotive Components Limited (TACL) has outlined its Capex plans for the fiscal year 2024 (FY24) across various product segments. The company aims to achieve 85% utilization levels for Gasket & Heat Shields, 80% for Forgings, and 75% for Marelli Talbros Chassis Systems (MTCS).
To add to its revenue streams, TACL plans to reach Rs. 50 Crores for Gasket & Heat Shield, Rs. 60 Crores for Forgings, and Rs. 80 Crores for MTCS in FY27e.
These Capex investments will be funded through internal accruals of Rs. 25-30 Crores per annum and some borrowings by the respective companies.
Future Goals
1. Increase export sales from 25% in FY23 to 35%+ in FY27.
2. Increase EBITDA margins from around 14% to 15-16% by FY27.
3. Increase ROCE (Return on Capital Employed) to 20%+ going forward.
4. To Maintain a comfortable debt profile, with total debt to remain under Rs. 100 crores.
Financial Outlook
Talbros reported solid performance in the second quarter of the fiscal year 2025. Revenue from operations grew by 11% year-over-year rising from Rs.194 crore to Rs 215.4 crore, indicating increased demand for the company’s products and services.
The EBITDA margin also improved from 15.6% in the previous year’s quarter to 16.9%, showcasing enhanced operational efficiency. The company’s EBIT increased by 18% year-over-year jumping from Rs. 24.7 crore to Rs. 29.2 crore, reflecting stronger profitability. Finally, Talbros’ profit after tax (PAT) grew by 17% from Rs. 20 crore to Rs. 23.4 crore, with the PAT margin improving from 10.2% to 10.6% over the same period.
These positive trends across revenue, margins, and profitability highlight Talbros’ ability to navigate the market dynamics effectively and deliver value to its stakeholders.
Conclusion
Talbros Automotive Components Ltd. appears to be a well-positioned player in the automotive manufacturing industry. The company’s diversified customer base, strategic focus on growth areas like electric vehicles, and consistent financial performance indicate its ability to navigate market challenges.
The future outlook, with plans to increase export sales, margins, and maintain a comfortable debt profile, suggests Talbros is well-poised for sustainable growth.
Written By: Dipangshu Kundu
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