Rico Auto Industries - Growth Visibility Remains Strong: HDFC Securities Initiates Coverage

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HDFC Securities Retail Research

Rico Auto Industries Ltd. is an established player in the auto ancillaries industry, with a track record of over three decades. It enjoys a strong market position in its key product segments: high-pressure aluminium and ferrous die cast components. The last couple of years have been subdued for the automobile industry.

A gradual recovery in the economy is expected to restore discretionary consumption for the middle to low income class and Rico is expected to be the key beneficiary as volumes of Maruti Suzuki India Ltd. and Hero Motocorp Ltd. (Rico’s key customers) are expected to be strong.

Its other major customer Kia is also witnessing strong volume growth.

On the export front, faster adoption of electric vehicle is leading to higher sales of aluminium casted components. Rico has been gradually expanding its capacities on back-to-back order basis.

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