This AUTO ANCILLARY stock is our new Favourite
We have made most of our returns from Auto stocks, mostly ancillary stocks that have defied cyclicality in a highly cyclical environment !!
The future of 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 the Indian Auto history was 2017-18 and we believe considering the average churn rate of 5 years, 2022- 23 is bound to be another great year for the India Auto Industry!
SJS Enterprises
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
The company valued at 1,339 Cr trades at a trailing 23.5x PE with an ROE of 15%. The operating margins improved by 100bps to 31% in the past quarter amidst global inflationary cues
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 away 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 major part of the Indian auto industry while being a key sector where premiumization is trending
Disclaimer:
The stock is currently on our watchlist and will be added to our Craving Alpha Core smallcase, you can invest in this strategy at 7500 +GST only for the month of August (when billed semi-annually)
With Gratitude,