Stocx Research Club logo ×
Screener Research Unlisted Startup Funding New IPO New

Krishan Varma    


Surat, India

Having hands on experience in relationship management with a demonstrated history of working with the Banks/NBFCs/Leading Brokerages house etc. Thus, having adequate knowledge of the Indian capital market where we acquire the retail/HNI clients for the MF SIPs/Lump Sum, F&O, Insurance, PMS and help them to make their future life wealthy.

Read More..
Contributor since: 2022

11

Articles

1

Likes

2

Followers

Comments: 0 | Likes: 0


Divgi TorqTransfer Systems Limited

A IPO Analysis


About company

Incorporated in 1964, Divgi TorqTransfer Systems Limited is engaged in the business as an automotive component entity. They are among the very few automotive component entities in India with the capability to develop and provide system-level transfer cases, torque couplers, and dual-clutch automatic transmission solutions.

Divgi TorqTransfer is one of the leading players supplying transfer case systems to automotive OEMs in India and the largest supplier of transfer case systems to passenger vehicle manufacturers in India. Not only thi are also the only player manufacturing and exporting transfer cases to global OEMs from India, and the only manufacturer of torque couplers in India.

Divgi TorqTransfer Systems Limited manufactures and supplies its products under a wide range which includes-

  1. Torque transfer systems (which includes four-wheel-drive ("4WD") and all-wheel-drive ("AWD") products);
  2. Synchronizer systems for manual transmissions and DCT;
  3. Components for the above-mentioned product categories for torque transfer systems and synchronizer systems in manual transmission, DCT, and EVs.

Alongside, they have also developed

  1. Transmission systems for EVs;
  2. DCT systems;
  3. Rear wheel drive manual transmissions.

Divgi TorqTransfer Systems Limited also takes pride in being among the few companies that serve as both, systems-level solution providers and component kit suppliers to global OEMs and Tier I transmission systems suppliers.

Business Overview

This company amongst the very few automotive component entities in India who have the capability to develop and provide system level transfer case, torque coupler and dual clutch automatic transmissions (“DCT”) solutions. The company are one of the leading players supplying transfer case systems to automotive OEMs in India and the largest supplier of transfer case systems to passenger vehicle manufacturers in India. They are also the only player manufacturing and exporting transfer cases to global OEMs from India, and the only manufacturer of torque couplers in India. Company also have the capability to develop and provide transmission systems for electric vehicles (“EVs”) and are in the process of designing and developing prototypes of transmission systems for EVs pursuant to receipt of a business award for this purpose. As on the date of this Draft Red Herring Prospectus, we have been awarded a contract for the supply of EV transmission systems for one of the leading providers of EVs in India, and for supply of components for Hybrid Vehicles for a global OEM. Company is actively collaborates with Europe’s transmission engineering consulting firms like FEV and Hofer.

The company manufacture and supply a variety of products under the broad categories of (i) torque transfer systems (which includes fourwheel-drive (“4WD”) and all-wheel-drive (“AWD”) products); (ii) synchronizer systems for manual transmissions and DCT; and (iii) components for the above-mentioned product categories for torque transfer systems and synchronizer systems in manual transmission, DCT, and EVs. Company have also developed (i) transmission systems for EVs; (ii) DCT systems; and (iii) rear wheel drive manual transmissions. The company are one of the few companies who serve both as systems level solution provider as well as component kit supplier to global OEMs and Tier I transmission systems suppliers.

The company have an in-house software development capability which helps them in providing system level solutions offering software that controls the vehicle dynamics. They are also one of the first few suppliers of steel and carbon-based synchronizer systems for the
Indian markets, and are one of the leading manufacturers of steel synchronizers in India.

The company have achieved leading positions for select products in their portfolio through focus on innovation; offering of customized solutions in distinctive products; in-house software development capability; and product development and production at quality standards acceptable to their clients and at optimized costs. The company are in the process of launching domestically manufactured DCT systems for the Indian market. Once launched, They will be the only manufacturer of DCT systems in India. Very few component suppliers as well as OEMs globally have the capability to develop the system integration software solutions in-house. Given this, they believe that system level solution providers such as them are likely to be highly valued by vehicle manufacturers globally.

Their diverse capabilities enable them to service customers across segments in the automotive industry, including passenger vehicles, utility vehicles and commercial vehicles. The company believe that having the ability to provide end-to-end solutions under one roof enables them to provide value added offerings, and increases their operational efficiency, resource optimization, and customer retention. The company supply to and have long term relationships with OEMs such as Mahindra & Mahindra, an Indian supplier to global automotive OEM, and a USA based multi-national automotive supplier. They have a client base of global OEMs and global transmission systems suppliers, with their top five customers accounting for 91.28%, 92.86%, and 86.94% of their revenue from operations for Fiscal 2022, Fiscal 2021 and Fiscal 2020, respectively.

Manufacturing Facility Details

The company have three manufacturing and assembling facilities across India located at Sirsi in Karnataka, and Shivare and Bhosari near Pune in Maharashtra, with the manufacturing facilities at Shivare and Bhosari being strategically located in proximity to their key clients, and one under-construction manufacturing facility located at Shirwal. The company have purchased 10 acres of land at Shirwal near Pune in Maharashtra and commenced construction which will help them in expanding their manufacturing capacity including for manufacture of DCT and EV transmissions. Company manufacture transmission, transfer case and synchroniser components at their facility in Sirsi. Company's Shivare facility houses grinding and superfinishing equipment to achieve standards in precision and accuracy, including those demanded by EV and DCT applications globally and transmission components. Company Bhosari facility, which is the assembling, lab testing and packing unit for their manufactured components and systems, and their Shivare facility, are strategically located in proximity to their key customers as well as the port for export located at New Mumbai. Company's key customers in close proximity to their Bhosari and Shivare facilities include Tata Motors, Mahindra & Mahindra, an Indian automotive manufacturing company and an Indian supplier to global automotive OEM.

Our business model is supported by a consistent track record of revenue growth and profitability. Set out below are certain financial metrics of our Company. 

Company's Strength

  • One of the very few suppliers in India having the capability to develop and provide system level transfer case, torque coupler, DCT solutions and transmission systems for EVs across a wide array of automotive vehicles and geographies, with leadership across select product categories.
  • Strategically located manufacturing facilities capable of producing high precision components meeting system-level design intent.
  • Long-term relationships with marquee domestic and global customers.
  • Experienced board of directors and senior management team supported by skilled and qualified workforce.
  • Consistent financial performance with focus on innovation and R&D capabilities.

Company's Strategies

  • Capturing market opportunities in the growing EV space, and the fast-growing demand for automatic transmissions in the passenger UVs segment.
  • Improve our market share and wallet share by increasing customer and geographic diversification.
  • Cost optimization through product engineering and localisation.
  • Continued focus on R&D to manufacture diverse products and expand into products to serve new and emerging trends.

Company's Business Operation

Company design, develop, manufacture and supply engineered, turnkey solutions and components to automotive OEMs across India, USA, China, Korea, Russia and others. With their strong focus on research and development and advanced in-house hardware and software capabilities, the company have also been providing turnkey solutions across the automotive industry, including passenger vehicles, utility vehicles, and commercial vehicles from their facilities at Bhosari and Shivare near Pune in Maharashtra and Sirsi, in Karnataka. Company's customer base includes leading automotive OEMs such as Tata Motors, Mahindra & Mahindra, BorgWarner, a Japanese automotive supply chain company, a Chinese automobile manufacturer, an Indian automotive manufacturing company, and an Indian supplier to global automotive OEM, amongst others. 

Company's systems and component offerings include four-wheel drive and synchronizer system solutions. Company manufa

cture and supply a variety of products under the broad categories of (i) torque transfer systems (which includes 4 wheel-drive (“4WD”)/ allwheel-drive (“AWD”) products); (ii) synchronizer systems for manual transmissions and DCT; and (iii) components for the above-mentioned product categories as well as for EVs. The company have also developed (i) transmission systems for EVs; (ii) DCT systems; and (iii) rear wheel drive manual transmissions.

Set out below is a tabular representation and description of the primary automotive systems and components offered by them.

Torque Transfer Systems

Manual Transmission

Synchronizer Systems

Dual Clutch Transmission

Transmissions for BEV

Components

Customers of the Company

The company serve a broad range of customers both in the Indian and overseas markets. The table below sets forth the breakdown of their income from sale of goods across geographic markets, as a percentage of ther total sale of goods for the periods indicated.

The company have developed long term relationships with marquee domestic and global OEMs in the automobile sector, such as BorgWarner, Tata Motors and Mahindra & Mahindra, amongst others, with some of whom they have had relationships for over two decades, including through their earlier joint ventures. For instance, the company have been in strong, continued business with Tata Motors ever since 1992. Company's relationship with customers has been built around firm business relations with the upper echelons of management. their relationships with marquee global OEMs, start right from the stage of design and development.

The table below sets forth the breakdown of their income from sale of goods across their top five customers, as a percentage of their total sale of goods for the periods indicated. The order of the top five customers in the table below is based on information as of March 31, 2022.  

Key Manufacturing Processes

Manufacturing Locations

Manufacturing Facilities

Management of the company

Praveen Purushottam Kadle - Chairman and Independent Director

Jitendra Bhaskar Divgi - Managing Director

Financials of the company

Risks:

Slowdown in auto industry

Higher raw material prices

Global slowdown

Currency volatility

 

Disclosure:

I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure:

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Stocx Research Club). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure:

Disclaimer - Not an recommendation, pls do your own research before applying for this IPO. Source - Company's DRHP

Disclosure legality:

I am not a SEBI Registered individual/entity and the above research article is only for educational purpose and is never intended as trading/investment advice.

Articles

Updated : Sep, 2023

Private Equity Valuation

Private Equity Valuation

Author : Mayur Kachhawa

Updated : Sep, 2023

IPO Analysis: Yatra Online

IPO Analysis of Yatra Online

Author : Shalom Martin

Updated : Sep, 2023

Nifty EPS grew around 7% in Q1FY24 and may grow 8% i...

Subdued discretionary consumer spending amid higher cost of living, higher cost of borrowings, and lingering global macro-headwinds affecting earnings

Author : Ashish Ghosh

Updated : Sep, 2023

Nifty stumbled from a lifetime high dragged by HDFC ...

Also, the diplomatic rift with Canada, fading hopes of an early election by Dec’23, and ONOE (one nation, one election) affected the Indian market

Author : Ashish Ghosh

Updated : Sep, 2023

Strong order book position and government support sh...

Tangible net worth of Salasar Techno Engineering Limited saw an improvement to INR399.60 crore in FY23 from INR281.10 crore in FY22. Overall, gearing has improved to 0.68x in FY23 in comparison to 0.86x in FY22. It has adequate liquidity position and ...

Author : TheAsianInvestor

Updated : Sep, 2023

IPO Analysis: Yatra Online

IPO Analysis of Yatra Online

Author : Shalom Martin

Updated : Sep, 2023

IPO Analysis: JSW Infrastructure Limited

JSW Infrastructure limited is the fastest growing port related infra company, which looks strong for further growth.

Author : Shalom Martin

Updated : Aug, 2023

Aeroflex IPO Case study

Aeroflex Industries Limited, an company operating in manufacturing of metallic hoses is coming up with IPO. This case study would cover the company and industry it is operating, and it is advised to apply in this IPO or not

Author : ABHIJAY PALIWAL

Updated : Jul, 2023

SBFC finance IPO- A detailed report

A new NBFC in market, SBFC Finance is coming up with an IPO of Rs. 1200 Crores in august. Mainly the company provides funds to three asset classes- MSMEs, gold and infrastructure. The company has strong financials and has posted better results in recen...

Author : ABHIJAY PALIWAL

Updated : Jul, 2023

Updated : Jul, 2023

Updated : Jun, 2022

Equity Research Report: Sakar Healthcare

Sakar Healthcare Ltd is engaged in manufacturing of pharmaceutical formulations in the form of liquid injectables, tablets/ capsules, oral liquid syrups, dry powder injectables and syrups. Presently, its domestic sales accounts for 31% of revenues and ...

Author : Akshita

Updated : Jun, 2022

EQUITY RESEARCH REPORT: NEWGEN SOFTWARE

Newgen Software Technologies is a global software Company and is engaged in the business of software product development including designing and delivering end-to-end software solutions covering the entire spectrum of software services from workflow au...

Author : Akshita

Updated : Jun, 2022

Nifty and Bank Nifty Tumbles Due to Weak Global Cues...

Nifty and Bank Nifty tumbles due to weak global cues lead by higher inflation data, higher crude oil prices and weakening currency.

Author : Shalom Martin

Updated : Jun, 2022

Equity Research Report: Shree Renuka Sugar

Shree Renuka Sugars is a global agribusiness and bio-energy corporation. The Company is one of the largest sugar producers in the world, the leading manufacturer of sugar in India, and one of the largest sugar refineries in the world.

Author : Akshita

Updated : Jul, 2022

Equity Research : Tata Consumer Products Limited

TCPL future ambitions remain aggressive, At 17% EPS CAGR over FY22-25e, TCPL should deliver industry-leading growth within indian FMCG.

Author : Shalom Martin

Updated : Jul, 2022

Equity Research: Birlasoft Ltd

Birlasoft, a small-cap IT company, has an upside potential of 35%. The company’s repeated demonstration of ‘walking the talk’ makes us believe that it is on track to achieve its stated target of USD1bn revenue by FY25E.

Author : Shalom Martin

Comments