The future of the Auto industry in India
The used car market in India in the financial year 2020 had a finance penetration rate of 19 percent, a slight increase from the previous year. It was estimated that the finance penetration rate could reach 35 percent in 2025. – (Statista, source)
The best year in Indian Auto history was 2017-18 and we believe considering the average churn rate of 5 years, 2022- 23 is bound to be another excellent year for the Indian Auto Industry!
SJS Enterprises Ltd (NS:)
How important is car aesthetics to today’s buyers?
This is one of India’s top three players in this segment and the only listed participant with this as their core business! The company also caters to the consumer appliances industry along with sanitary ware
Snapshot from investor presentation Q1 FY23
The company is valued at Rs 1,403 Cr and trades at a trailing 23.2x PE with an ROE of 15%. The operating margins improved by 100bps to 31% in the past quarter amidst global inflationary cues. They have consistently maintained margins of over 30% since 2015.
The company continues to operate in a high-growth industry with mega order wins from Continental, Marelli, Stellantis, and Whirlpool in the last quarter. They have recently expanded their output in chrome-plating to meet higher demand and have entered two new economies of Argentina & Ohio, USA.
In the high-growth business, the company is debt free which keeps it from bankruptcy risk. Like very few companies they have proved their ability to create inorganic value by acquisitions in the past and we believe that is one of the fastest ways to grow if a company can successfully execute & assess synergies
Revenue breakup of the company shows 43.3% of their revenues from 2- wheelers which remain to be a significant part of the Indian auto industry while being a key sector where premiumization is trending
The investing team might have a vested interest in the stocks discussed, please do your due diligence before investing this discussion is only for educational purposes.
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