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Key Highlights

* Company Background: Uniparts India is a global manufacturer of engineered systems and solutions. It is also one of the leading suppliers of systems and components for the off-highway market in agriculture and construction, forestry and mining. Their product portfolio includes core product verticals of 3-point linkage systems (3PL), precision machined parts (PMP), as well as adjacent product verticals of power take off (PTO), fabrications and hydraulic cylinders or components thereof. In the global 3PL and PMP market, Uniparts had an ~16.7% and ~5.9% market share in FY22. Further, its manufacturing, warehousing and distribution facilities are strategically located in India, US and Germany.

* End-to-end provider of precision engineered products: Over the years, Uniparts have evolved from a component supplier to a provider of complete assemblies of precision engineered products. Its end-to-end solutions range from product conceptualization, design, prototyping, testing, development and assembly to customized packaging and delivery and becoming an integral part of certain of their customers’ global supply chains.

* Maintaining long-term relationships with its customers: They have developed long-term relationships with global OEM customers in the agriculture and CFM sectors. Over the years, the company has developed relationships with various customers and fulfilled their orders as per requirements and preferences. This helped the company in cross selling opportunities, healthy revenue generation and building strong long term relationships with customers.

* Strategies going forward: The company’s strategy is to acquire new customers as well as focus on value added products which would help in growth and margin improvement. Further, they intend to focus on acquiring businesses with high growth and performance potential, along with their existing customer relationships and product and process competencies. Besides, they have plans to explore opportunities in Europe and the US which would complement their existing business.

* Financials: Uniparts overall financials seems better as compared to its peers. The company’s Revenue and PAT grew by 16.3% and 63.2% CAGR over FY20-22. For FY22, its EBITDA and PAT margins were at 22.1% and 13.6% while ROE and ROCE stood at 26.8% and 31.0% which Is better than peers. On the valuation front, it is trading at PE of 15.4x FY22.

* Key Risk: 1) Depend on a limited number of customers for a significant portion of their revenues. 2) Exposed to foreign currency exchange rate fluctuations.

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