Multibagger Idea - 4/5x returns

1 de nov. de 2023

RACL Geartech Ltd (referred to as ‘RACL’ or ‘Company’) was established in the year 1987 for producing automotive components in the field of Motorcycles & Scooters, 3&4 Wheeler Passenger & Cargo Vehicles, Agricultural Machinery, Tractors, ATV, Light & Heavy Commercial Vehicles, etc. The company has also expanded into subassemblies, industrial Gears for electrical switch Gears and Circuit Breakers, Winches and Cranes.
Created a niche market to cater to client who need quality products at value based pricing and on time performance. Given the fact that the Gear market is an extremely competitive one, RACL has been able to create a unique product portfolio for the market & further working on upgrading capabilities in terms of quality, technology and skill set of the people to prepare for the catering to the requirement of Gears for E- Mobility Solution


It is a customer centric Organisation obsessed with world class benchmarking and are supplying to top Global OEM’s like BMW Mottarad, Germany, Kubota Corporation (Japan, Thailand and USA), IT Switzerland (Same Group Company), KTM AG (Austria) Schneider Electric (Germany), Dana (Italy and China) amongst others.
RACL has acquired 100% shares of Racl Geartech Gmbh (Austria), making it as a wholly owned subsidiary

CAPEX
In FY23, the Co. intends to undertake a capex of Rs. 50 crores. It spent the same figure in FY22. A part of it was spent to create infrastructure, to fund the new project and to fund its existing projects. Broadly, around 35% was spent towards its production activities and all the production machines
Some capex is being used this year for creating housing infrastructure for senior employees. We have our factory in a remote place, so, to retain the talent also is a challenge for us. We already have a small housing campus and now we are upgrading and expanding that so that new talent can be retained

FUTURE PROSPECTUS
For FY 21-22, Company had a little over 2% of EV Participation which will now increase this year to 4-5% and eventually it will increase around 6%, in the next year also. Apart from EV, They have also diversified into, Chassis & Suspension parts too, these are not dependent upon, EV, Fuel or Hybrid, they have common application for all the platforms. In the coming years, company's EV and Suspension will grow more than 16% of revenue and it will be not dependent on type of vehicle and this way company is preparing for the future

* Bagged order from an European Two Wheeler manufacturer for supplying finished forgings Yoke’s. This is a new business line. In past, RACL has never supplied parts till Forging stage.

* Received best supplier award for 100% Delivery by Kubota India in for CY 22

* New Shakti plant was inaugurated in March 2023. The plant has been commissioned and commercial production has started for few projects

* SOP for two new ZF business started in June 2023. ZF dedicated plant running at 95% Utilisation. Project volume has peaked 2 years before anticipated projections

* Bagged order for transmission sub assembly from Aprilia ltaly for 660CC motorcycle.

* Signed a PPA (Power Purchase Agreement)for 4MW with a Green Power generating company for Gajrauvla Plant. RACL will be using 60% renewable energy from FY24, thereby reducing the carbon footprint and reducing its electricity bill by 10% appx.


FY 2024-25, company plans to become a Rs. 500 Crore Company. This road map was chalked out around 2-3 years back and at that time, it looked very aggressive and over optimistic. But now as we are nearing FY 2024-25, RACL is very confident to achieve it. Further, if we talk about the 5 years after that, then since past few years RACL have grown over by 20-25% even after the Covid impact. By virtue of that, once the target of 500 Crores is achieved, then 20-25% of that will also add substantially to our growth. RACL does not want to limit at 500 Crore and will grow gradually over the period of time. But as of now, they are focusing on FY 2024-25 and once that is achieved, the next roadmap will be planned.

Buying Rates -
1219
1191
1125
1068
991
975
944


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Regards,
Naresh G
SEBI Reg. RA