| Work Detail |
In Mondays intra-day trade, the shares of Subros, an auto components and equipment company, experienced a remarkable 18% surge, reaching a new high of Rs 530 on the BSE. The stocks impressive performance was fueled by the companys recent accomplishment of securing orders worth Rs 25 crore from the Indian Railways.
During morning trade, the stock was quoting 13% higher at Rs 510, outperforming the S&P BSE Sensex, which saw a marginal gain of 0.17%. Trading volumes on the counter soared over four-fold, with a substantial 1.9 million equity shares, equivalent to 2.9% of Subros total equity, changing hands on the NSE and BSE.
In an official exchange filing, Subros announced that it had successfully secured new orders from the Indian Railways for the supply and commissioning of Coach Roof Mounted Air-Conditioners, totaling approximately Rs 25 crore. The company already serves as a supplier of Rail Driver Cabin Air-Conditioning Systems to the Indian Railways, and the focus on Coach Air-Conditioners aligns with its strategic direction to expand its business in the Railway Electric Mobility Segment.
While Subros is considered a key player benefiting from this development, analysts at ICICI Securities noted that the stock had already witnessed an uptick following the announcement in June 2023. Despite the current high stock price, they highlighted potential concerns, stating, "At the CMP (current market price), the stock trades expensive given its muted margins as well as return ratios profile."
Subros, in technical collaboration with Denso Corporation, Japan, is a leading manufacturer of thermal products for automotive applications in India. The company is primarily engaged in manufacturing and selling thermal products for automotive and home air-conditioning original equipment manufacturers. It operates as a joint venture with 36.79% ownership by the Suri family of India, 20% ownership by Denso Corporation, Japan, and 11.96% ownership by Suzuki Motor Corporation, Japan.
Despite facing intense competition in the sector, Subros has successfully maintained a strong market position, benefiting from integrated manufacturing operations and robust product development capabilities. While the companys revenue mix has historically been skewed towards the passenger vehicle (PV) segment, it has strategically expanded its product range to cater to commercial vehicle OEMs and diversified into segments such as home air conditioners (through contract manufacturing for other brands) and the Indian Railways.
Analysts anticipate that while the PV segment will continue to be the companys primary revenue driver, its dependence on this segment is expected to decrease over the medium term as supplies for new business segments scale up. |
