GNA Axles ↗

GNA was promoted by Late Rachhpall Singh and his brother Gursaran Singh, the latter being the company’s current managing director with around five decades of industry experience. His son, Ranbir Singh, and other family members are also involved in the company’s day-to-day business activities. The company directors are assisted by a team of professionals who are highly experienced in their respective domains. Being established in 1946, the GNA group, which also includes GNA Gears Limited, has

The company supplies its products to varied segments of the automotive industry, including commercial vehicles (CV or the on - highway segment), tractors, farm equipment, and earth moving equipment (all three being part of the off-road segment). The company derives significant income from export of its products to the US, Europe, Asia Pacific (Japan and China among others), Mexico, Brazil, and so forth , with exports constituting around 53% of its total operating income ( TOI) in FY23 (refers to

The GNA group has been operating in the auto component industry since 1946 , thus having built time-tested relationship with customers – with some ever since the commencement of its operations. Besides, it has been supplying to some of its export customers since 2000. GNA markets its products through the common group marketing network catering a whole range of products, including axles, gears , and shafts under one roof. The long and established relationship with customers provides revenue

In FY24, the company achieved TOI of ₹1 ,508.67 crore compared to a TOI of ₹1 ,582.93 crore in FY23 driven by moderation in price realisations owing to weak tractor sales in the domestic market. The profit before interest, lease rentals, depreciation and taxation (PBILDT) margin marginally declined to 13.24% in FY24 (PY: 14.70%). The profit after tax (PAT) margins declined to 6.63% in FY24 from 8.22% in FY23. Comfortable financial risk profile

The company’s capital structure remained comfortable with long-term debt-to equity and overall gearing ratios of 0.04x and 0.24x, as on March 31, 2024, respectively (PY: 0.07x and 0.28x, respectively). The same improved mainly due to reduction in debt and accretion of profits to the net worth. The company has low reliance on working capital borrowings as it only avails the pre-shipment credit for exports and substantial portion of its inherently high working capital requirements are funded by in

GNA has adequate liquidity with sufficient cushion in cash accruals (₹152.58 crore in FY24) against minimal debt repayment obligations in FY25. The company has a comfortable current ratio of 2.16x as on March 31, 2024 (PY: 1.93x) and its fund-based limits are utilised to the extent of around 79% for trailing 12 months ended April 2024. CARE Ratings understands, the company does not have any major capex plans barring routine capex in next three years which is expected to be funded through the

The company’s operations are raw material intensive in nature with the raw material cost constituting around 66% of the gross sales in FY24. However, despite high volatility in global steel prices, GNA has been able to maintain its profitability margins in a range as it has largely been able to pass on higher input costs to its customer regularly till now. Moreover, foreign currency risks on export realisations are broadly mitigated due to usage of packing credit in foreign currency and historic

Being in auto ancillary industry, the company’s operations are working capital intensive in nature. The company maintains inventory of around 2 to 2.5 months with large product range (axle shafts and spindles ranging from 2 kg to 150 kg). The average debtor days usually remain elongated as the company has major dependence on export customers for sales having credit period of close to 4-5 months as its customers have higher bargaining power. The company’s aggregate operating cycle deteriorated

Automotive industry is subject to cyclical variations in performance and is sensitive to demand and government policy changes. GNA’s performance remains closely aligned to the performance of key customers and in-turn exposed to cyclical demand patterns inherent to the automobile industry and ability of the OEMs and their tier-1 vendors to sustain their operating performance. Following the economic fallout led by the COVID-19 pandemic, domestic and global auto sales were impacted in the past.