gna2GNA Axles Limited, an established player in rear shaft axles is coming out with an IPO issue. GNA  Axles was incorporated in  1993, at Jalandhar, as a public limited company  and today is among the leading manufacturers of rear axle shafts used in on-highway and off-highway vehicular segments in India. Detailed IPO Report and  analysis is with a view to help investors to evaluate whether to subscribe to the issue or not

About the  IPO Issue :

Price band: Rs. 205-207

Issue Date :  Opens 14th Sep, 2016  – Closes 16th Sep, 2016

Issue Size :  Fresh Issue of 63,00,000 shares – Rs.130.41 Crore at upper Limit

Face Value: Rs. 10/-

Lead Managers : PNB Investment Services Ltd.  Ambit Private Ltd

GNA Axles intends to utilise the IPO proceeds for purchase of plant & machinery; working capital requirements; and general corporate purposes. The IPO would constitute 29.35 percent of the post-issue paid-up equity share capital of the company.

About the Company:

GNA Axles is into manufacturing of rear axle shafts used in on-highway and off-highway vehicular segments in India. The company manufacture and supply a diverse range of rear axle shafts, other shafts and spindles for the on-highway segment, i.e. for light commercial vehicles (LCVs), medium commercial vehicles (MCVs) and heavy commercial vehicles (HCVs) and other transport vehicles such as buses. The company also manufacture and supply a diverse range of rear axle shafts and other shafts for the off-highway segment, i.e. for agricultural tractors and machinery, forestry and construction equipments, electric carts and other specialty vehicles used in mining and defense sectors. The company also manufacture solid and hollow spindles used in the axle assembly for various vehicles and equipments in the on-highway segment which it supplies to export customers.

The revenue from the sale of rear axle shafts accounted for 83% of its turnover in the year 2015-16.

GNA Axles customers include global OEMs and tier-1 suppliers such as Dana Limited (USA, Mexico and Brazil), John Deere (Spain and USA), Kubota Corporation (Japan) and Meritor HVS AB (Sweden, Italy, Brazil, USA), as well as leading Indian OEMs and tier-1 suppliers such as Claas India Private Limited, TAFE, International Tractors Limited, Escorts Limited, Axles India Limited, Automotive Axles Limited and Mahindra & Mahindra Limited.  GNA Axles has a long standing relationship with Mahindra & Mahindra Limited and John Deere, which are our two largest customers in the off-highway segment in India, and Automotive Axles Limited which is our largest customer in the on-highway segment in India.

The company has two manufacturing plants in districts Hoshiarpur and Kapurthala in Punjab and both the plants are ISO/TS 16949:2009

GNA axles manufactures a diverse range of rear axle shafts, other shafts and spindles.

Revenue breakup from  product sales  ( Rs. Million)
Particulars 2016 2015 2014 2013
 Product Amount % of revenue from operations Amount % of revenue from operations Amount % of revenue from operations Amount % of revenue from operations
Rear axle shafts 4,201.79 83.61% 3,227.96 75.80% 3,123.90 77.79% 2,766.07 79.93%
Other shafts 314.33 6.25% 392.04 9.21% 312.05 7.77% 258.07 7.46%
Spindles 428.46 8.53% 533.02 12.52% 500.02 12.45% 363.06 10.49%

Within each of the product group (rear axle shaft, other shafts and spindles), GNA axles manufacture a diverse range of products for different vehicle categories:

Rear axle shafts:

in the on-highway segment, for SCVs, MCVs, HCVs and buses; and

in the off-highway segment, for agricultural tractors and machinery, forestry and construction equipments, electric carts and other specialty vehicles;

Spindles:

in the on-highway segment, for SCVs, MCVs, HCVs and buses; and

in the off-highway segment, for agricultural tractors and machinery, forestry and construction equipments, electric carts and other specialty vehicles;

Other shafts:

in the on-highway segment, for SCVs, MCVs, HCVs and buses; and

in the off-highway segment, for agricultural tractors and machinery, forestry and construction equipments, electric carts and other specialty vehicles.

Key Milestones

The key milestones indicating the growth of our Company since its inception are :

Year Particulars
1994 Company obtained certificate for commencement of business
1995 Company started supply of fully finished and ready to assemble mechanised axle shafts to OEMs, such as Mahindra & Mahindra Limited
2002 – 2003 Started exports to USA and Europe
2004 Installed 13” Upsetter with new heat treatment shop
2007 Commissioned 66 kVA dedicated electricity supply line for Unit I
2008 Invested in forging technology for rear axle shafts with direct drive screw press supported by robots
2012 Commissioned  Unit  II  with  facility  for  commercial  vehicle  axle  shafts  and  spindles machining
2013 Commissioned Lasco extrusion press supported by robots and electric heat treatment furnace at Unit II
Commissioned direct drive screw press for heavy axle shaft forgings supported by robots at Unit I
2015 Commissioned 66 kVA dedicated electricity supply line for Unit II

Financials:

For Fiscal 2016, GNA Axles  total revenue and net profit were Rs. 5,089.43 million and  259.27 million, respectively, on a consolidated basis. For Fiscal 2016, the revenue from operations was Rs. 5,025.60 million on a consolidated basis, comprising domestic sales of Rs. 2,275.87 million and export sales of Rs. 2,749.73 million.

Particulars As at March 31,   ( In Rs. Crore)
2016 2015 2014 2013
Revenue from Operations 502.56 425.87 401.58 346.07
Revenue Growth (%) 18.01% 6.05% 16.04%
Profit  Before Tax 39.31 20.74 18.47 17.63
Net Profit 25.96 21.6 13.27 4.81
NPM 5.16% 5.07% 3.30% 1.39%
EPS (Rs.) 17.12 14.24 8.75 3.17
Share Capital 15.17 15.17 15.17 15.17
Reserves 123.14 97.64 76.4 63.36
Net Worth 136.11 112.81 91.56 78.52
FV 10 10 10 10
RoNW (%) 18.77% 19.17% 14.49% 6.13
NAV 89.77 74.29 60.37 51.78
Debt Equity Ratio 0.95 1.35 1.46 1.42

See Related Post for Comparison with Peers : GNA Axles: Comparison with Peers

 Assessment:

  • The Domestic rear axle shaft market expected to grow at 13% CAGR over the next five years as per Crisil Report
  • Among the leading manufacturers of axle shafts in India;
  • Diverse product range of axle shafts and spindles;
  • Strong long term customer relationships and diversified customer base; GNA Axles customers include global OEMs and tier-1 suppliers as well as leading Indian OEMs and tier-1 suppliers
  • Manufacturing facilities with large capacity and modern machinery;
  • Experienced management and skilled employee base;
  • Strong engineering, product development and technological capabilities;
  • The company has exhibited Sustained financial performance both in terms of revenues and profits.
  • Exports account for more than 50% of GNA axles turnover
  • While it is difficult to comment on management quality at this stage, the issue looks reasonably valued against its peers
  • GNA axles is in auto ancillary sector which is doing well. It is perhaps  due to fear of  5% circuit limits and small size , it has not caught fancy which is also shown by little reported  grey market GMP or Form /  Kostak deals.
  • Incidentally PNB was last time lead manager to Dilip Buildcon IPO issue, which gave decent returns to investors even as retail was not subscribed heavily.
  • I intend to apply for this IPO
Advertisements