CIE Automotive - Demand-Led Capacity Expansion To Drive Growth: Axis Securities

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Axis Securities Report.European Operations: CIE Automotive Ltd.’s business from continuing operations in robust 29% YoY to Rs 3,165 crore (despite the light vehicle industry (less than six tonnes) declining by 1.3%YoY and flat growth in medium and heavy commercial vehicle segment in CY22). The outperformance was mainly driven by market share gains (40% YoY in CY22) due to the consolidation of the supply chain network.Transition to electric vehicle: EVs have become mainstream in both Europe and India. In Europe,market penetration of EVs is increasing rapidly (market share more than on the rise in India as well, especially two-wheeler and and steel forgings, gears, stampings, and composite parts for e-two-wheeler, e-three-wheeler and e-four-wheeler. In CY22, nearly 40% of the order book in Europe and 35% of the orderbook electric vehicles.Indian operations: CIE’s Indian operations contributed 64% of CY22's total revenues. The company reported revenue of Rs ~5,587 crore (~29% YoY) in CY22 average performance of its key customers in passenger vehicle and trac John Deere), increased orders from Tata Motors Ltd., KIA, Hyundai, and passing on input costs to customers.Capacity expansion: The company’s capex policy is usually 5-6%, of this, 2% goes to maintenance and the rest to growth. order book situation in India requires capital expenditure across all verticals to increase capacity.  Exports: Exports form 10-12% of total sales. Exports are mainly carried out from India to Europe and from the Italian subsidiary to the U.S. Key Highlights Healthy liquidity: The company has ensured its stability and business performance by maintaining adequate cash and cash equivalents (including bank balances) totalling ~Rs 158 crore as of December 2022. In addition, its net debt has decreased to ~Rs 89 crore in CY22 from ~133 crore in CY21.Segmental performance India: In India, forging division(PV)/bill Forge(two-wheeler)/stamping division / castings / magnetics / composites / gears/aluminium casting division grew by 55%/ 36%/ 43%/ 30%/ 20%/40%/14%/4% YoY respectively. Revenue in aluminum castings was subdued due to the high exposure to Bajaj, where production volumes in CY22 were down 11% YoY. In Europe, PV forgings and Metalcastello respectively grew by 30%/20% YoY.Segment performance Europe: In Europe, PV Forging and Metalcastello 30% and 21% YoY, respectively. Industry growth and supplier consolidation led to market share gains..Click on the attachment to read the full report:.Balkrishna Industries - Weakest Month Of OHT Exports Since Destocking Started A Year Back: ICICI Securities.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

CIE Automotive - Demand-Led Capacity Expansion To Drive Growth: Axis Securities

The company’s Capex policy is usually 5 to 6% of this, 2% goes to maintenance and the rest to growth.

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