Rico Auto Industries Ltd, incorporated in 1983, is a leading engineering company specializing in the manufacturing and sale of automotive components for two-wheelers and four-wheelers. The company, part of the Ludhiana-based Rico Group, develops and markets critical automotive components across multiple vehicle segments including two-wheelers, four-wheelers, commercial vehicles, passenger vehicles, and off-road segments.
Rico Auto Industries supplies high-precision, fully machined aluminum and ferrous casting components and assemblies to global original equipment manufacturers (OEMs) for hybrid, electric, and internal combustion engine vehicles. The company offers integrated services spanning design, development, tooling, casting, machining, and assembly across both ferrous and aluminum products.
Rico Auto Industries has demonstrated resilient financial performance despite market challenges. The company currently has a market capitalization of ₹1,055 crores as of May 2025. For FY25, the company reported revenue of ₹2,225 crores, though net profit declined by 45% compared to the previous year.
The latest quarterly results for Q3 FY25 demonstrate the following:
* Total revenue stood at ₹554 crores, reflecting a 4.8% year-over-year growth from ₹528 crores in Q3 FY24.
* EBITDA declined by 24.8% year-over-year to ₹47 crores from ₹63 crores in Q3 FY24, with EBITDA margin contracting by 336 basis points to 8.5%.
* Net profit dropped 82.5% year-over-year to ₹2 crores from ₹11 crores in Q3 FY24, with net profit margin at 0.3%.
* Current Stock Price: ₹78.00
* 52-Week High: ₹149.00
* 52-Week Low: ₹49.50
* Market Capitalization: ₹1,055 crores (as of May 2025)
* FY25 Revenue: ₹2,225 crores
* Q3 FY25 Revenue: ₹554 crores
* Q3 FY25 Net Profit: ₹2 crores
* Price-to-Earnings Ratio: 46.8
* Return on Capital Employed (ROCE): 7.02%
* Return on Equity (ROE): 3.11% (5.28% over last three years)
* Dividend Yield: 0.75%
* Sales Growth (last 5 years): 9.57%
The company operates through a comprehensive manufacturing ecosystem that caters to diverse automotive needs. Rico Auto Industries offers an extensive product portfolio including oil pump assemblies, fuel system parts, lube oil filter heads, exhaust manifolds, turbine housings, center housings, back plates, crank cases and covers, cylinder head covers, oil pans, intake manifold covers, front covers, valve covers, side covers, balance shafts assemblies, gear housings, and main bearing caps, as well as water, air connections, and pressure plates.
The company manufactures auto components such as wheel hubs, clutches, brake systems, engine housings, crank housings, gears and oil pumps for various automotive manufacturers, including Maruti, amongst other products. The company's strategic focus on both traditional automotive components and emerging electric vehicle technologies positions it well in the evolving automotive landscape.
In recent earnings calls, the company highlighted robust domestic sales growth, projecting over ₹300 crores despite export challenges stemming from geopolitical tensions. While the automotive sector faces mixed performance, particularly in entry-level vehicles, optimism remains regarding rural market dynamics, especially in the 2-wheeler segment, bolstered by favorable monsoon conditions.
The company anticipates domestic revenues to reach over ₹2,100 crores and exports around ₹375 crores for the full year. Management aims to achieve 11% margins in the current year, with a target of 13% in the near future, expecting revenue growth of 12% annually with a goal of reaching ₹5,000 crores by 2029-30.
The company's strategic shift towards domestic operations and investments in electric vehicle components reflects a proactive approach to enhance profitability and operational efficiency. Rico Auto targets 20% growth for FY26 to ₹2,652 crores, with ₹220 crores capex planned for the Hosur plant, focusing on export recovery and new defense/railway orders.
The defense sector shows promise with a healthy order pipeline, although cash flow delays from contract payments pose challenges. The company has secured new business program value of ₹3,601 crores, indicating strong future order visibility.
Despite its diversified product portfolio, strong OEM relationships, and strategic focus on emerging technologies, Rico Auto Industries presents several investment considerations:
* The company has delivered a modest sales growth of 9.57% over the past five years.
* Rico Auto Industries has a low interest coverage ratio, which investors should consider when evaluating the company's debt servicing capabilities.
* The company has maintained a low return on equity of 5.28% over the last three years.
Rico Auto Industries remains well-positioned in the automotive components sector with its established manufacturing capabilities and ongoing capacity expansion initiatives supporting its long-term growth prospects in the evolving automotive industry.
