Belrise Industries
IPO Size: Rs. 2,150 cr, Entirely Fresh issue
- For debt repayment of Rs.1,618 cr, of Rs. 2,600 cr gross debt
Price band: Rs. 85-90 per share
M cap: Rs. 8,009 cr, implying 27% dilution
IPO Date: Wed 21st May to Fri 23rd May 2025, Listing Wed 28th May 2025
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
Aurangabad-based Auto Component Maker
Belrise Industries manufactures metal chassis systems (top-selling product), polymer components, suspension systems, body-in-white components and exhaust systems, with sheet metal, accounting for 70% of Rs. 8,000 cr annual revenue. It has 17 plants across India’s auto belt, deriving ~75% revenue from India. Catering to two-wheelers (2/3rd revenue share), three-wheelers, four-wheelers and commercial vehicles, Bajaj Auto, Honda Motorcycle, Hero Moto, Jaguar Land Rover, Royal Enfield are key customers.
Recent Acquisition
In Mar 2025, Belrise acquired H-One India from its Japan’s parent, for a reported Rs. 380 cr consideration, which manufactures high-tensile steel fabrication for passenger vehicles at 2 plants in North India. H-One’s FY24 revenue was at Rs. 336 cr, but margin is learnt to be lower than Belrise, besides a patchy track record of profits.
Debt Repayment
On a net worth of Rs. 2,587 cr as of 31.12.24, net debt of Rs.2,523 cr implied a debt equity ratio of 0.98:1. Post IPO, debt equity ratio will be comfortable at 0.2:1, in addition to saving interest costs.
Margins Under Pressure
FY24 revenue rose 14% YoY to Rs. 7,484 cr but EBITDA excluding other income rose only 6% YoY, to Rs. 924 cr. PAT actually declined 1% YoY to Rs.311 cr, translating into an EPS of 4.8.
9MFY25 witnessed growth slowdown and margin contraction, with revenue flat YoY at Rs. 6,013 cr and EBITDA down marginally to Rs. 796 cr and PAT dropped 17% YoY to Rs.245 cr. EBITDA margin excluding other income fell from 13.3% in FY23 to 12.4% in 9MFY25.
Inline Pricing
Lower interest outgo leads to an estimated FY26E EPS of about Rs. 5.8, against Rs. 3.8 EPS for 9MFY25. This implies a PE multiple of 15.5x on FY26E basis, which is in-line for margin compression, 5% expected net margin and 13% RoE. While 2W industry outlook is positive on rural demand revival and normal monsoon forecast, sector cyclicity and few company risks remain:
- Related party transactions account for 25-30% of sales and expenses
- 20% revenue comprises pure-ICE components, like exhaust, which is concerning given high electric penetration, especially in 2W and 3W segment.
Thus, the IPO is priced as per company’s mediocre financials and market positioning.
21st May 2025 at 09:39 pm