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Deepak Industries

₹1,760.00
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Available in Depository:
NSDL
CDSL

Available for Investment:
Primary
Secondary

RATING

RECOMMENDATION

Neutral

Business Type

Traditional Business

Investment Checklist

Management

Accounting Practice

Profitability

Solvency

Growth

Valuation

RATING

RECOMMENDATION

Neutral

Business Type

Traditional Business

Deepak Industries Unlisted Shares Essentials
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ISIN

INE485J01016

Face Value

₹10.00

Total Share

39,56,433

Total Income

₹646.87 Cr

Profit After Tax

₹83.07 Cr

Promoter Holding

69.05 %

EPS

₹209.93

P/E

8.38

P/B

1.72

Market Capitalisation

₹696.33 Cr

Enterprise Value

₹594.50 Cr

Book Value

₹1,020.61

Intrinsic Value

₹1,503.00

Dividend Yield

0.57 %

Earnings Yield

11.93 %

Sector

Industrials

Sub-sector

Industrial Machinery

Deepak Industries Growth

About Deepak Industries

Deepak Industries Limited (DIL) is an established and reputed manufacturer of gearboxes and gears for industrial and automotive applications such as Worm Gearboxes, Helical Gearboxes, Geared Motors, Couplings & Clutches, Spur and Helical Gears, Rear Axle and Shafts, Transmission Gears and Shafts, Straight Differential Bevel Gears and Pinions and Timing Gear. The company is also engaged in the generation and sale of electricity.
The industrial gears serve different sectors of industries like steel, cement, sugar, mining, paper, turn key projects, capital goods manufacturers, power, and the infra sector.
The automobile gears cater to tractors, two-wheelers, and commercial vehicles. OEM manufactures and the replacement markets.
The company’s manufacturing plants are located in Kolkata (West Bengal), Faridabad and Palwal (Haryana), Udham Singh Nagar (Uttarakhand), Dharwad (Karnataka).
The company sells its products in India as well as overseas.
DIL is incorporated on 8th May 1954 and is based out of Kolkata.

Deepak Industries IPO Details

The company’s shares are listed on The Calcutta Stock Exchange Limited. However, it is mentioned in the FY22 annual report, that there has been no trading of the Company’s shares during the year on The Calcutta Stock Exchange.

Deepak Industries Merger & Acquisition

Acquisition

In Q1, FY22, the company acquired, on a going concern basis, Lotus Auto Engineering Limited (LAEL), which is presently manufacturing from low to medium weight machined castings and supplying for companies like Maruti Suzuki India Limited, Cummins Inc, BorgWarner, Honda, Multimatic etc. In accordance to this, the company invested Rs. 38 Cr. and issued 3364 zero coupon optionally fully convertible secured debentures. On a provisional basis, 1 lakh equity shares of Rs 10 each and 43,60,000 equity shares of Rs 10 each have been issued and, thereby, LAEL became a wholly owned subsidiary of the company. This, however, is subject to approval from the Adjudicating Authority (AA) and closure of the liquidation process.

Deepak Industries Subsidiaries

The company has no Subsidiary, Associates and Joint Venture as on 31st March, 2022.

Deepak Industries Business Model

The company is engaged in the manufacturing of industrial and automobile gears, which are sold in India as well as overseas. The company also has a solar power segment, which is engaged in the generation and distribution of electricity.

Deepak Industries Revenue Segmentation

Automobiles gears
Industrial gears

Solar Power

Deepak Industries Product & Services

Worm Gearboxes
Helical Gearboxes
Geared Motors
Couplings & Clutches
Spur and Helical Gears
Rear Axle and Shafts
Transmission Gears and Shafts
Straight Differential Bevel Gears and Pinions
Timing Gear
Solar power

Deepak Industries Assets

Total assets as on March 31, 2022:

Particulars	Amount ( in Rs. Cr.)
Freehold Land	19.98
Land-Right to use	1.22
Factory Building	10.84
Plant and equipment	125.93
Furniture and fixtures	0.33
Vehicles	1.48
Office equipment	0.55

Deepak Industries Industry Overview

Industry Statistics

Overview:

The auto-components industry includes frame, suspension system, axles, wheels, gearboxes and many more. The $46 billion (FY21) auto components industry in India is expected to grow to $200 billion by 2026. Indian auto component industry exports, which are currently valued at $13.3 billion in FY21, are expected to reach $80 billlion by 2026. A stable government framework, increased purchasing power, large domestic market, and an ever-increasing development in infrastructure have made India a favourable destination for investment.
The USA, Germany, United Kingdom, Thailand, and Italy are the top destinations for exports of auto components.
Automotive gearbox is a mechanical device created by automotive gearbox manufacturers for increasing thrust force or changing the motor speed. The crankshaft is attached to one end of the gearbox, which delivers a particular output speed and torque dictated by the gear ratio through the internal arrangement of gear in the gearbox.
An industrial gearbox is a type of enclosed system responsible for transmitting mechanical energy to designated units. In the process, gearboxes control rotation speed and torque. Unlike standard gearboxes, industrial models feature a longer lifespan and improved safety mechanisms.
The Industrial Gearbox Market is expected to reach $38.10 billion by 2028, growing at a 4.5% CAGR during the forecasted period of FY21-28. In today's world, consumers preferances are inclined towards enhanced driving experience, smooth gear shifting and expectation of high performance which in turn will drive the demand for automative gearboxes.

Key Trends:

The prices of the gearboxes are highly dependent on it's major raw material i.e. steel, so it becomes imperative for us to talk about the steel industry. India is the second largest producer of steel in the world after China. In the year 2021, India’s steel production stood at 104.91 MMT, out of which finished steel production was 96.20 MMT and consumption was 93.057 MMT. The Indian steel industry is affected by demand and supply of steel, shipping costs, exports and imports and thus directly affect the auto component industry.

Peers:

Leading players in the segment are B & R Machine and Gear, Bharat Gears, Gleason Plastic Gears, IMS Gear, Taiwan United Gear and Universal Auto Gears.

Future Prospects

The Indian auto-components industry is set to become the third largest in the world by 2025. Indian auto-component makers are well positioned to benefit from the globalization of the sector as export potential could be increased by up to US$ 30 billion.
The global automotive market will be growing at a CAGR of 4.24% to reach $108.2 billion by 2025. Increasing consumer preferance for enhanced driving experience, smooth gear shifting and expectation of high performance from personal vehicles are the factors driving the increased demand.
Industrial Gearbox Market may witness a remarkable growth owing to factors such as integrating smooth operation of machinery in various industries and rising demand from cement, steel, power plants, plastic, and rubber industries. Additionally, rapid industrialization will increase the footprint of the market. Increasing investment in manufacturing infrastructure also helps to increase the market share of the industrial products market, owing to various applications of engineering gases in the healthcare and food & beverages industries.

Government Initiatives

In January 2021, the Ministry of Steel, Government of India, signed a Memorandum of Cooperation (MoC) with the Ministry of Economy, Trade and Industry, Government of Japan, to boost the steel sector through joint activities under the framework of India–Japan Steel Dialogue.
The Government of India’s Automotive Mission Plan (AMP) 2006-2026 has come a long way in ensuring growth for the sector. Indian Automobile industry is expected to achieve a turnover of US$ 300 billion by 2026 and will grow at a CAGR of 15% from its current revenue of US$ 74 billion.

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi announced the Production-Linked Incentive (PLI) Scheme in the Automobile and Auto Components sectors. The PLI scheme (outlay of $ 3.5 Bn) for the automobile sector proposes financial incentives of up to 18% to boost domestic manufacturing of advanced automotive technology products and attract investments in the automotive manufacturing value chain. Incentives are applicable for determined sales of products manufactured in India from April 1, 2022, for a period of five consecutive years. The scheme was closed on 9th January 2022. Total 95 applicants have been approved under this PLI scheme: 20 under Champion OEM and 75 under Component champion.

Deepak Industries Strengths

The Company continues has a domestic long term credit rating of [ICRA]AA- .and the short-term rating at [ICRA] A1+, which means the company is credible and has low chances of default. The got such rating because of it's growing scale of operations, healthy business returns and limited needs for additional borrowings due to sizeable cash accruals.
Company has acquired M/s. Lotus Auto Engineering Limited (LAEL), which allows expansion of business through inorganic growth by adding new product line in the manufacturing of automotive parts machining.

Deepak Industries Shortcomings

The company has made sufficient investment and requires skilled man power to operate the latest technology machines. Increased power cost, higher transaction cost, high cost of labour continues to hinder the progress.
The company has dependence on four companies for sale of its automobile gears. High dependence on few customers is a matter of concern.
Competition from peers and unorganised sector continues to be intensifying.

Deepak Industries Opportunities

There is immense scope for growth, considering the existing supply and demand mismatch, and knowing the fact that the consumption In India is voluminously larger as compared to the combined output of the domestic manufacturers.
India is expected to be the world's third-largest automotive market in terms of volume by 2026, which holds an immense growing potential for the companies associated with the auto industry of India.
The decline in Covid-19 cases in India and the easing of restrictions by the government to open the country completely creates hope for the bounce back of manufacturing industry of India.

Deepak Industries Threats

The limitation arises out of deliberate decision on the part of domestic manufacturers to keep low inventories of its imported key raw materials which is more than 80% to limit the risk of price fluctuations which may result in huge loss.
The company's has a greater dependence on automobile gears which account for 87.47% of total revenue. Major dependence on one sector continues to be a threat for the company.
Very low bargaining and pricing power of auto ancillary companies with customers and suppliers continues to be a threat for the company.

Deepak Industries Rating

RECOMMENDATION

Neutral

Deepak Industries Detail Info

Industry Statistics

PRIVATE LIMITED

Registered In

India

last Updated

30/08/2022

Registered Date

08/05/1954

Planify Ticker

DPI

Reg Office: 16, HARE STREET, KOLKATA-700001

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This new SEBI rule was introduced in the month of August-2021, wherein the SEBI has reduced the lock-in period previously from 1 year to 6 months to encourage more and more funds to be invested in startups which are going to public or IPO in near future. Reduction of lock-in is seen as big step and after that many PMS funds are advising their clients to invest in Pre-IPO shares to get the benefit of early stage investment.

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