One of the small-cap auto ancillaries stocks engaged in the manufacturing of pistons, piston pins, piston rings, and engine valves for various automotive companies in the domestic and export markets. The stock is in focus after the company projects 16.73% EBITDA Growth to Rs. 750 crore in FY25, with Margins Rising to 21%
Stock Price Movement:
In Friday’s trading session, Shriram Pistons and Rings Limited’s share jumped by 0.5 percent from the previous close of Rs. 2,067.75. The stock opened at Rs. 2,052.35 and is currently trading at Rs. 2,068, with a high of Rs. 2,098 and a low of Rs. 2,027. The market capitalization now stands at approximately Rs. 9,109.50 crore.
Company Overview:
Shriram Pistons and Rings Limited (SPR) was established in 1963 and is India’s largest manufacturer of pistons, piston rings, and engine valves. The company is headquartered in New Delhi and supplies high-quality automotive components to domestic and international markets, serving diverse industries with a focus on innovation and manufacturing excellence.
Management Guidance:
The company projects an EBITDA of ₹750 crores in FY25, marking 16.73% growth from FY24, with an anticipated margin of 21%. For FY26, EBITDA is expected to rise to ₹850 crores, reflecting a 13.65% increase from FY25, with a projected EBITDA margin improving slightly to 21.78%.
Future Growth and Capacity Expansion
Shriram Pistons and Rings Limited plans to sustain growth through its aftermarket segment and capitalize on rising EV market demand by focusing on electric motors.
The company is exploring potential mergers and acquisitions in non-ICE sectors to diversify and grow. A new plant is set to double capacity for motors and controllers, ensuring readiness to meet future demand.
Customer base
Shriram Pistons and Rings Limited serves a diverse customer base across vehicle segments, including prominent OEMs such as Tata, Mahindra, Bajaj, Honda, and John Deere. This wide customer reach spans commercial, passenger, two-wheeler, and off-highway sectors, enhancing growth potential.
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Strategic Initiatives
Shriram Pistons and Rings Limited are diversifying into EV mobility solutions and precision injection-molded parts through acquisitions like SPR Takahata and SPR EMFi. A new plant in Coimbatore for SPR EMFi will commence operations by April 2025.
The company is also advancing technology-driven components for ICE and alternative fuels, including hybrid, hydrogen, CNG, LNG, and biofuels, to align with evolving market demands.
Products and Services Offering
Shriram Pistons and Rings Limited produce a diverse range of automotive components, including pistons, piston pins, piston rings, engine valves, and more. Catering to OEMs and the aftermarket, it serves vehicles like passenger cars, commercial vehicles, two-wheelers, and agricultural machinery.
Recent quarter results and ratios:
Shriram Pistons and Rings Limited’s revenue has increased from Rs. 752 crore in Q2 FY24 to Rs. 876 crore in Q2 FY25, which has grown by 16.49 percent. The net profit of Shriram Pistons and Rings Limited has also grown by 11.50 percent, from Rs. 113 crore in Q2 FY24 to Rs. 126 crore in Q2 FY25.
Shriram Pistons and Rings Limited’s revenue and net profit have grown at a CAGR of 24.60 percent and 70.23 percent, respectively, over the last three years.
In terms of return ratios, the company’s ROCE and ROE should be 27.9 percent and 25.2 percent, respectively. The debt-to-equity ratio of the company is to be 0.24x, which shows the company is almost debt-free. Shriram Pistons and Rings Limited’s EPS is to be Rs. 106.
Shareholding pattern
In September 2024, Shriram Pistons and Rings Limited had a majority stake held by the promoters at 43.75 percent, foreign institutional investors at 4.27 percent, domestic institutional investors at 12.74 percent, and the public at 39.24 percent.
Written By – Nikhil Naik
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