MUNJALSHOW - Munjal Showa

📊 NSE: MUNJALSHOW 🏢 Auto Ancillaries 📅 Last Updated: 12/14/2025 10:07

💰 Financial Performance

Revenue Growth by Segment

Revenue for FY25 reached INR 1,250.45 Cr, a 6.6% increase from INR 1,172.73 Cr in FY24. However, Q1 FY26 revenue of INR 286 Cr showed an 8% YoY decline due to falling sales volumes from primary customers. The company primarily serves the 2-wheeler segment (front forks, shock absorbers) and 4-wheeler segment (struts, window balancers).

Geographic Revenue Split

100% of revenue is generated within India, with manufacturing facilities located in Gurugram and Manesar (Haryana) and Haridwar (Uttarakhand).

Profitability Margins

Operating margins moderated to 1.4% in FY25, down from 2.5% in FY23, primarily due to lower operating leverage and one-time provisions. PAT margin stood at 2.6% in FY24 with a profit of INR 31 Cr.

EBITDA Margin

Operating margin remained flat at 1.4% in FY25. Core profitability is constrained by the inability to pass on raw material cost increases to OEMs, leading to sustained low margins.

Capital Expenditure

Planned annual capital expenditure is between INR 10 Cr and INR 12 Cr, which is expected to be funded entirely through internal accruals of INR 18-20 Cr.

Credit Rating & Borrowing

CRISIL downgraded the long-term rating to 'CRISIL A/Stable' from 'CRISIL A+/Stable' in September 2024. The company remains debt-free with a gearing of less than 0.1x since 2013.

⚙️ Operational Drivers

Raw Materials

Steel and aluminum components are the primary raw materials. Cost of materials consumed in H1 FY25 was INR 486.14 Cr, representing 78.6% of total revenue.

Capacity Expansion

Current capacity utilization is described as 'subdued' or 'lower' due to declining orders across segments. No specific MT/unit expansion figures were provided beyond maintenance capex.

Raw Material Costs

Raw material costs represent approximately 78-79% of revenue. The company faces high sensitivity to input prices as it has low bargaining power with OEMs to pass on cost hikes.

Manufacturing Efficiency

Efficiency is currently hampered by low operating leverage; however, the proximity of the three manufacturing plants to key client facilities helps manage logistics and requirements efficiently.

Logistics & Distribution

Distribution is optimized by locating plants in Gurugram, Manesar, and Haridwar, which are close to the primary manufacturing hubs of its key OEM customers.

📈 Strategic Growth

Expected Growth Rate

Growth Strategy

Growth is targeted through cost corrective measures (VRS, SOP changes), investments in solar power to reduce overheads, and attempts to diversify the customer and product profile beyond the traditional 2-wheeler segment.

Products & Services

Front forks and shock absorbers for 2-wheelers; struts and window balancers for 4-wheelers.

Brand Portfolio

Munjal Showa

New Products/Services

The company has developed components for the EV segment, though recent performance was hit by subsidy changes.

Strategic Alliances

Technical and financial collaboration with Hitachi Astemo Ltd (formerly Showa Corporation, Japan), which holds a 24.90% equity stake.

🌍 External Factors

Industry Trends

The industry is shifting toward Electric Vehicles (EVs), but MSL's transition has been slowed by regulatory changes in subsidies. Competitive intensity in the suspension segment remains high.

Competitive Landscape

Intense competition from other auto-component manufacturers and rising pressure from OEMs to reduce pricing.

Competitive Moat

The company's moat is based on its long-standing technical collaboration with Hitachi Astemo and the strategic location of its plants near key customers, providing a logistics cost advantage.

Macro Economic Sensitivity

Highly sensitive to cyclical demand in the Indian automotive industry and changes in government subsidies like FAME-II.

Consumer Behavior

Shift toward EVs is a key trend affecting long-term demand for traditional suspension components.

⚖️ Regulatory & Governance

Industry Regulations

Operations are significantly impacted by FAME-II subsidy regulations and automotive safety/manufacturing standards.

Environmental Compliance

The company is increasing its ESG focus through solar power investments to reduce its carbon footprint.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the high customer concentration; a slowdown in the key client's market share would lead to sustained low capacity utilization and margin pressure.