MENONBE - Menon Bearings

📊 NSE: MENONBE 🏢 Auto Ancillaries 📅 Last Updated: 12/14/2025 9:48

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue from operations grew 14.1% YoY to INR 242.52 Cr in FY25 compared to INR 212.62 Cr in FY24. The Bi-Metal division remains the primary contributor, while the Alkop (Aluminum) division showed healthy growth driven by exports. The Brakes division, a newer segment, contributed INR 4 Cr in H1 FY26 with a full-year FY26 target of INR 13-14 Cr.

Geographic Revenue Split

Approximately 80-90% of revenue is derived from the domestic Indian market, primarily the auto sector. Export revenue is expected to increase significantly starting Jan-Feb 2026 following the commencement of billing for the Allison Transmission order in the US, which involves two batches of parts already dispatched for warehousing.

Profitability Margins

Gross Profit Margin stood at 59.54% in FY25, a slight decline from 61.60% in FY24. Net Profit Margin (PAT) decreased from 11.46% in FY24 to 10.28% in FY25. The decline is attributed to the separation of the Alkop division and higher operating expenses related to new capacity commissioning.

EBITDA Margin

EBITDA margin was 18.62% in FY25 (INR 45.16 Cr), down from 20.37% in FY24 (INR 43.32 Cr). Margins were impacted by higher OpEx costs following a major INR 30 Cr capex program; however, H1 FY26 margins showed recovery to 18.8%.

Capital Expenditure

The company executed a significant capex of INR 30 Cr in FY24 and INR 10 Cr in FY25. Specific investments include INR 20 Cr in the Bi-Metal division, INR 20.5 Cr in Alkop (INR 12.5 Cr incurred + INR 8 Cr ongoing), and INR 12 Cr in the Brakes division (INR 9 Cr incurred + INR 3 Cr for inspection equipment).

Credit Rating & Borrowing

CRISIL reaffirmed 'CRISIL BBB+/Stable' for long-term and 'CRISIL A2' for short-term facilities. Interest coverage ratio remains strong at 13.8x in FY24, though down from 18.36x in FY23 due to increased debt-funded capex.

⚙️ Operational Drivers

Raw Materials

Bi-metal strips, Aluminum (for Alkop division), and materials for brake linings/shoes. Raw material and direct costs represent approximately 40.46% of total revenue based on FY25 gross margins.

Import Sources

Not specifically disclosed in available documents, though manufacturing plants are concentrated in Kolhapur, Maharashtra.

Capacity Expansion

Capacity additions are focused on the Bi-Metal and Alkop divisions to meet export demand. Significant capex is completed, with no major requirements planned until the second half of 2027 (FY28).

Raw Material Costs

Raw material costs are managed through efficient working capital; however, gross margins compressed by 2.06% in FY25, indicating rising input costs or a change in product mix toward lower-margin segments.

Manufacturing Efficiency

The company is focusing on increasing revenue from existing new plants to drive incremental margins through better absorption of fixed OpEx costs.

📈 Strategic Growth

Expected Growth Rate

25%

Growth Strategy

Growth will be driven by the commercialization of new product lines (Brakes), expansion of the Alkop division for export markets, and a major new contract with Allison Transmission in the US. The company also plans to enter the Railway segment in FY27 and is focusing on large-diameter bearings in the Bi-Metal division.

Products & Services

Bearings, bushes, thrust washers, bi-metal strips, aluminum die-cast products, brake linings, and brake shoes.

Brand Portfolio

Menon Bearings, Alkop, Menon Brakes.

New Products/Services

Brake linings and brake shoes launched via Menon Brakes Pvt Ltd (commercial production started April 2023); entry into Railway components planned for FY27.

Market Expansion

Expanding presence in the US market through the Allison Transmission partnership and increasing export focus in the Alkop division.

Strategic Alliances

Partnership with Allison Transmission (US) for part supply; upcoming partnership with Indian Railways for FY27.

🌍 External Factors

Industry Trends

The industry is seeing a shift toward specialized auto components and aluminum die-casting. Menon is positioning itself by diversifying into brakes and non-auto segments like oil and gas and electrical to reduce its 80-90% auto-dependency.

Competitive Landscape

Competes with other auto-component manufacturers in the bearings and braking segments; market dynamics are influenced by OEM procurement cycles.

Competitive Moat

Moat is built on a 30-year established market position and long-standing relationships with Tier-1 OEMs like John Deere and Tata Motors. This is sustainable due to high entry barriers in OEM supply chains involving rigorous testing (e.g., dynamometer testing for brakes).

Macro Economic Sensitivity

Highly sensitive to the Indian agricultural economy (tractor demand) and industrial activity (commercial vehicles).

Consumer Behavior

Shift toward higher-quality, durable engine components in the CV and tractor segments.

Geopolitical Risks

Export growth to the US (Allison) makes the company sensitive to international trade relations and shipping timelines (45-50 days transit to US).

⚖️ Regulatory & Governance

Industry Regulations

Complies with SEBI (LODR) Regulations 2015 and automotive manufacturing standards required by OEMs like Tata Motors and John Deere.

Environmental Compliance

The company maintains a focus on pollution-free and clean environments as part of its corporate philosophy.

Taxation Policy Impact

Effective tax rate was approximately 26.3% in FY25 (INR 8.91 Cr tax on INR 33.84 Cr PBT).

⚠️ Risk Analysis

Key Uncertainties

Cyclicality of the tractor and CV segments could lead to revenue volatility; successful scaling of the new Brakes division is critical for margin recovery.

Geographic Concentration Risk

Heavy concentration in Maharashtra for manufacturing and India for sales (80-90%).

Third Party Dependencies

High dependency on key OEM clients like John Deere and Tata Motors for the majority of the order book.

Technology Obsolescence Risk

Risk of shift toward electric vehicles (EVs) which may use fewer traditional engine bearings, though the company is diversifying into brakes and aluminum parts.