Long

GNA Axles Limited Going Towards Its All TIME HIGH's

GNA

GNA Axles is engaged in the Business of manufactures auto components for the four-wheeler industry, primary product being Rear Axles, Shafts, Spindles & other Automobiles Components for sale in domestic and foreign market.

..................................................................................................................
..................................................................................................................
..................................................................................................................

Key strengths

Extensive experience of promoters/management and long track record of operations
GNA was promoted by Late Rachhpall Singh and his brother Gursaran Singh, the latter being the company’s current managing
director with around five decades of industry experience. His son, Ranbir Singh, and other family members are also involved in
the company’s day-to-day business activities. The company directors are assisted by a team of professionals who are highly
experienced in their respective domains. Being established in 1946, the GNA group, which also includes GNA Gears Limited, has
a long track record of operations.

...............................................................................
Diversified revenue stream across product segments and geographies
The company supplies its products to varied segments of the automotive industry, including commercial vehicles (CV or the onhighway segment), tractors, farm equipment, and earth moving equipment (all three being part of the off-road segment). The
company derives significant income from export of its products to the US, Europe, Asia Pacific (Japan and China among others),
Mexico, Brazil, and so forth, with exports constituting around 53% of its total operating income (TOI) in FY23 (refers to April 1
to March 31) [around 60% in FY22]. The company is a Tier-1 vendor for its supplies in domestic off-road segment, while in the
exports markets, it supplies axles and spindles to larger and more established Tier-1 vendors.

................................................................................
Long and established relationship with customers
The GNA group has been operating in the auto component industry since 1946, thus having built time-tested relationship with
customers – with some ever since the commencement of its operations. Besides, it has been supplying to some of its export
customers since 2000. GNA markets its products through the common group marketing network catering a whole range of
products, including axles, gears, and shafts under one roof. The long and established relationship with customers provides revenue
stability to the company, subject to overall industry demand scenario.

....................................................................................
Reputed, though concentrated customer base
While GNA faces customer concentration with its top-5 and top-10 customers accounting for around 64% and around 80% of its
total gross sales in FY23, the risk is largely mitigated as the top revenue contributors are well-established players and enjoy strong
position in the industry. GNA is the main supplier of axle shafts to most of the original equipment manufacturers (OEMs) that it
supplies to, and by virtue of its long-standing relationships with the customers, the company has a strong market position. For
some of its export customers, the supplies are made by GNA for their plants in various countries, thereby mitigating the risk
arising from slowdown in one geographical location.

.........................................................................
Comfortable scale of operations with largely steady margins
In FY24, the company achieved TOI of ₹1,508.67 crore compared to a TOI of ₹1,582.93 crore in FY23 driven by moderation in
price realisations owing to weak tractor sales in the domestic market. The profit before interest, lease rentals, depreciation and
taxation (PBILDT) margin marginally declined to 13.24% in FY24 (PY: 14.70%). The profit after tax (PAT) margins declined to
6.63% in FY24 from 8.22% in FY23.

.......................................................................................
Comfortable financial risk profile
The company’s capital structure remained comfortable with long-term debt-to equity and overall gearing ratios of 0.04x and
0.24x, as on March 31, 2024, respectively (PY: 0.07x and 0.28x, respectively). The same improved mainly due to reduction in
debt and accretion of profits to the net worth. The company has low reliance on working capital borrowings as it only avails the
pre-shipment credit for exports and substantial portion of its inherently high working capital requirements are funded by internal
accruals. The interest coverage ratio remained healthy at 17.3x in FY24 (PY: 21.22x) due to healthy profitability and low interest
costs on foreign currency borrowings. The company’s total debt to PBILDT stood comfortable at 0.95 as on March 21, 2024 (PY:
0.87x).

iism-ExpertTrading

Also on:

Disclaimer

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.