A Global Leader in Auto Components: Ring Plus Aqua Limited is a leading auto-component manufacturer with history of 30+ years and a strong global presence. Ring Plus Aqua Limited manufactures products for automotive, industrial, agricultural, and marine OEMs in India and internationally. Its product line includes ring gears, water pump/integral shaft bearings, flexplates, sheet metal pulleys, and machined components.
Revenue Growth: The company has witnessed a significant increase in revenue, escalating from ₹312.0 crore in FY22 to ₹374.8 crore in FY23, reflecting a growth rate of 20.1%. The notable growth in the automotive sector predominantly contributes to the company's five-year Compound Annual Growth Rate (CAGR) standing at 11.48%.
Manufacturing KPIs: The company has demonstrated exceptional financial performance compared to its peers, with metrics such as cash conversion cycle (FY23: 17 days vs industry average of 106 days), debt-to-equity ratio (5 year average of 8.74% vs industry average of 72.75%), and asset turnover ratio (FY23: 1.6 vs industry average of 1.1) consistently exceeding industry averages.
Profitability Ratios: The ROE of the company stands to be at 27.5% vs industry average of 18% in FY23.
Key Shareholders: With a considerable 89.07% ownership, JK Files and Engineering Ltd. holds a significant stake in Ring Plus Aqua. Moreover, since JK Files and Engineering is entirely owned by Raymond Ltd., this arrangement establishes Ring Plus Aqua Ltd. as a sub-subsidiary of Raymond.
Investment Thesis: In comparison to other companies in its industry, Ring Plus Aqua Ltd. seems to be highly undervalued, presenting an EV/EBITDA ratio of 6.0x (adjusted for a 20% discount due to its non-listed status). This valuation appears slightly below the current industry average of 10.3x, indicating an intrinsic value of the stock around ₹817 per share.
Despite exhibiting strong financial performance, favorable profitability ratios, efficient asset turnover, and a robust cash conversion cycle, the co-mpany has been assigned a neutral rating. It holds a prominent position in the industry with a strong support base from promoters. Nevertheless, the anticipated disruption arising from the growing adoption of electric vehicles, which eschew the use of ring gears, flex plates, or water pump bearings, poses a notable threat to the company's prospective growth. This perceived risk could elucidate the company's comparatively lower valuation in relation to its peers. Moreover, there may be exit challenges for investors in the short term, so it is more suitable for those who are willing to maintain their investment for a period exceeding 10 years.
The talent & passion, strong focus on quality, multiple innovations leading to IPR creation, combined with our corporate culture of excellence, makes us a dynamically growing company that continues to offer best of our services to our esteemed customers even in the most challenging economic conditions. Looking forward, we aim to build strong relationships with our customers and become the trusted partner in the industry across globe by driving continuous improvement and staying globally competitive.
Quantity
Invest
Min. Investment: ₹