GNA 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 notAbout 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)|
|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%|
|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|
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)|
|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|
|Debt Equity Ratio||0.95||1.35||1.46||1.42|
- 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