Akar Auto Indust - Akar Auto Indust

📊 BSE: 530621 🏢 Auto Components & Equipments 📅 Last Updated: 11/13/2025 15:25

💰 Financial Performance

Revenue Growth by Segment

Total Operating Income grew 0.896% to INR 377.17 Cr in FY25 from INR 373.82 Cr in FY24. Growth was supported by higher production volumes in passenger vehicle and two-wheeler segments, offsetting a 1.2% decline in domestic commercial vehicle sales.

Geographic Revenue Split

Domestic sales account for approximately 80% of revenue, while exports contribute ~20% (INR 74.76 Cr in FY24). Export markets include USA, Netherlands, Germany, South Africa, Canada, Italy, Saudi Arabia, UK, Tanzania, Vietnam, Hungary, and Poland.

Profitability Margins

Gross margins are supported by raw material pass-through arrangements with OEMs. Operating Profit Margin improved to 5.84% in FY25 from 5.37% in FY24. Net Profit Margin increased to 1.71% (INR 6.46 Cr) in FY25 from 1.47% (INR 5.49 Cr) in FY24.

EBITDA Margin

EBITDA margin expanded to 7.06% in FY25 from 6.39% in FY24. Absolute EBITDA grew 11.4% YoY to INR 26.63 Cr, driven by efficient cost management and stability in raw material costs.

Capital Expenditure

The company is undertaking ongoing capacity expansion and solar power projects to enhance cost efficiency. Total debt increased slightly to INR 74.83 Cr in FY25 to support these initiatives.

Credit Rating & Borrowing

Ratings upgraded in November 2025 to IVR BBB/Stable (Long Term) and IVR A3+ (Short Term) from IVR BBB-/Stable and IVR A3. Borrowing includes term loans of INR 13.26 Cr and cash credit limits of INR 33.75 Cr.

⚙️ Operational Drivers

Raw Materials

Steel is the primary raw material. The company sources 16.37% of its total steel requirement from group company RL Steels and Energy Limited.

Import Sources

Raw materials are primarily sourced domestically from Maharashtra (Aurangabad) to minimize logistics costs.

Key Suppliers

RL Steels and Energy Limited is a key supplier, providing strategic proximity (a few kilometers from the manufacturing unit) and quality control.

Capacity Expansion

Current installed capacity is 36,840 MTPA as of August 2025, up from 34,300 MTPA in 2024.

Raw Material Costs

Raw material costs are managed through pass-through arrangements with OEMs. Sourcing from group companies leads to significant savings in transportation costs.

Manufacturing Efficiency

Manufacturing base in Aurangabad provides a strategic locational advantage over peers in Gujarat and Punjab, enabling lower logistics costs for southern and western India markets.

Logistics & Distribution

Strategic location in Maharashtra enables better access to major auto OEMs and distributors across India.

📈 Strategic Growth

Expected Growth Rate

Not disclosed in available documents

Growth Strategy

Growth will be driven by the reduction in GST rates on commercial vehicles from 28% to 18% (effective Sept 2025), capacity expansion, and increased demand for leaf springs and forging products in secondary markets.

Products & Services

Precision engineered forging components, hand tools, tool kits, and leaf springs for auto and non-auto OEMs.

Brand Portfolio

Akar Auto Industries Limited (AAIL).

New Products/Services

Expansion of value-added product offerings in the European Union and advanced technology components for the EV segment.

Market Expansion

Targeting expansion in the European Union and increasing penetration in secondary markets for toolkits following GST rate cuts.

Strategic Alliances

Maintains a strategic sourcing arrangement with group company RL Steels and Energy Limited for 16.37% of steel requirements.

🌍 External Factors

Industry Trends

The industry is shifting toward EV-aligned components and advanced technologies. The CV segment is expected to recover following the GST reduction to 18%.

Competitive Landscape

Intense competition from both domestic and international automotive ancillary players exerts continuous pressure on margins.

Competitive Moat

Moat is built on long-standing (30+ years) relationships with Tier-1 OEMs and locational advantages in Aurangabad. Sustainability is supported by backward integration into solar power.

Macro Economic Sensitivity

Highly sensitive to infrastructure spending and private sector capital expenditure, which directly influence commercial vehicle demand.

Consumer Behavior

Fleet operators have recently postponed purchases due to constrained infrastructure spending, though demand is expected to revive in FY26.

Geopolitical Risks

Global uncertainties and regulatory changes in export markets like the USA and Germany pose potential trade barrier risks.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to SEBI (LODR) Regulations 2015 and the Companies Act 2013. Compliance with pollution norms and manufacturing standards is mandatory.

Environmental Compliance

Investing in solar power projects to improve ESG profile and reduce long-term energy costs.

Taxation Policy Impact

Effective tax rate resulted in PAT of INR 6.46 Cr from PBT of INR 9.08 Cr in FY25. GST rate on CVs reduced from 28% to 18% in Sept 2025.

Legal Contingencies

The company has affirmed compliance with the Code of Conduct for Directors and Senior Management; no specific pending litigation values were disclosed.