IPO Note : Belrise Industries Ltd by Geojit Financial Services Ltd
A leading automotive component manufacturer...
Belrise Industries Ltd (BIL), established in 1996, is a leading Indian manufacturer of automotive components, specializing in safety-critical and precision-engineered solutions across vehicle segments, including two-, three-, and four-wheelers, commercial, and agricultural vehicles. In FY24, BIL held a 24% market share in the two-wheeler metal components segment. Its diversified product portfolio spans chassis systems, polymer and suspension components, BIW structures, and exhaust systems for both EVs and ICE vehicles. As of 9MFY25, BIL has built strategic partnerships with 29 global OEMs, such as Bajaj Auto, Honda, Hero MotoCorp, Jaguar Land Rover, and Royal Enfield. The company operates 17 facilities across 10 cities in 9 states, processing 60,000 tons of steel annually.
* The Indian auto component market is expected to expand at a 9-11% CAGR between FY24-FY29E, reaching rs 12,000-13,000 bn, fuelled by economic recovery (~6.4% GDP growth), robust demand from OEMs and the replacement market.
* The two-wheeler metal products market size valued at Rs 171.2 bn FY24, is projected to grow at an 11-13% CAGR, reaching Rs 346-348 billion by FY30, benefiting key industry players like BIL.
* BIL’s revenue grew at a CAGR of ~18% over FY22-24 to Rs 7,484cr led by a rise in the sale of products, a diversified portfolio, strategic manufacturing expansions & strong OEM demand.
* EBITDA grew at a CAGR of ~10.7% over FY22-24, while EBITDA margins declined by 160 bps from 14% in FY22 to 12.4% in FY24 due to increase in operating expenses. Consequently, PAT margins contracted by 70 bps to 4.2% in FY24 vs. 4.9% in FY22, while reported PAT grew at ~9% CAGR over FY22-24, reaching ?311cr in FY24.
* BIL's strategy to increase content per vehicle driven by industry’s shift towards high value components (especially in electric & hybrid vehicles), along with its focus on advanced manufacturing and strategic OEM partnerships, is expected to strengthen its market position and drive long-term profitability.
* The current net debt to equity ratio is at 1.0x and upon utilisation of net proceeds from the IPO for debt repayment, the net debt/equity ratio will trim down to 0.2x.
* At the upper price band of ?90, BIL’s is available at a P/E ratio of 25.8x (FY24 EPS), which appears to be reasonably priced compared to its long term profitability and PAT margin expansion owing to improvement in financial metrics.
* Given its dominant market share, diversified product portfolio, strong presence in EV& IC engine segments, capacity expansions, optimize inventory management and favourable industry outlook, we recommend a "Subscribe" rating for a long-term basis.
Purpose of IPO
The issue is primarily a fresh issue of up to 23,88,88,888 equity share totalling Rs 2,150cr. The net proceeds from IPO will be utilised for repayment/ prepayment, in full or in part, of certain outstanding borrowings availed by the company ( ~Rs 1,618cr) and general corporate purposes.
Key Risks
* Revenue concentration: ~64% of revenue ( 9MFY25) is derived from 10 largest customers.
* ~65% of revenue comes from sale of automotive components for two-wheeler vehicles.
* Volatility in raw material costs and supply issues can affect business profitability.
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SEBI Registration Number: INH200000345
