Shriram Pistons Initiating Coverage - 140324 - Others-054537

BUY Shriram Pistons & Rings
Dominant & growing franchise at attractive valuations

Auto & Auto Ancillaries  Initiating Coverage  March 14, 2024 TARGET PRICE (Rs) : 2,450
We initiate coverage on Shriram Pistons (SPRL) with BUY and 70% upside, at Target Price – 12M Mar-25
18x FY26E PER. We believe: i) SPRL’s further strengthening of its already Change in TP (%) NA
Current Reco. BUY
dominant positioning in core products (40-45% share in pistons, piston rings,
Previous Reco. NA
engine valves) and content per vehicle (CPV) in upcoming ‘greener’ and
Upside/(Downside) (%) 69.7
competitive (to EVs) ICE engine variants, ii) its emergence as ‘the last man
CMP (13-Mar-24) (Rs) 1,444.1
standing’ for engine parts (amid significant exports tailwinds/curtailment in
ICE components investments globally), iii) extended growth visibility for ICE
Stock Data Ticker
amid emerging challenges to EV penetration, iv) its diversification into EV-
52-week High (Rs) 1,867
specific and powertrain-agnostic components (via 2 M&As in the past 18M), and
52-week Low (Rs) 491
v) 17% FY24E-26E EPS CAGR, net-cash balance sheet (BS), over 20% RoE and
Shares outstanding (mn) 44.7
~9% FY26E FCF yield warrant 18x FY26E multiple vs. current ~10.7x.
Market-cap (Rs bn) 65
Shriram Pistons & Rings: Financial Snapshot (Consolidated) Market-cap (USD mn) 780
Y/E Mar (Rs mn) FY22 FY23 FY24E FY25E FY26E Net-debt, FY24E (Rs mn) -5,607
Revenue 20,647 26,093 30,660 34,952 39,146 ADTV-3M (mn shares) -
EBITDA 3,045 4,604 6,408 7,410 8,456 ADTV-3M (Rs mn) 393.4
Adj. PAT 1,636 2,943 4,303 5,059 5,939 ADTV-3M (USD mn) 4.7
Adj. EPS (Rs) 37.1 66.8 97.7 114.8 134.8 Free float (%) 22.0
EBITDA margin (%) 14.7 17.6 20.9 21.2 21.6 Nifty-50 21,998
EBITDA growth (%) 41.3 51.2 39.2 15.6 14.1 INR/USD 82.9
Adj. EPS growth (%) 87.2 78.8 48.5 17.6 17.4 Shareholding, Dec-23
RoE (%) 13.6 21.2 25.3 24.2 23.4 Promoters (%) 46.8
RoIC (%) 14.5 24.7 32.0 32.9 34.4 FPIs/MFs (%) 1.1/13.1
P/E (x) 38.9 21.6 14.8 12.6 10.7
EV/EBITDA (x) 20.2 13.0 9.1 7.5 6.2
P/B (x) 5.1 4.2 3.4 2.8 2.3 Price Performance
FCFF yield (%) 2.6 4.6 4.9 6.8 9.0 (%) 1M 3M 12M
Source: Company, Emkay Research Absolute (16.1) 42.8 164.6
Rel. to Nifty (17.1) 35.9 106.4
Dominant 40-45% share in core products across segments
SPRL, with an over 5-decade experience and presence across segments (2Ws, PVs, CVs,
1-Year share price trend (Rs)
Railways, Defence), is a leader in its core products (pistons, piston pins and rings, engine
1825 Rs % 170
valves; has 90% share in CNG engines; supplier of pistons for Tata/AL hydrogen buses
on trials), aided by: i) four strong decades-old tech partnerships, augmented by in-house 1550 134
R&D capability (adapting global technology to Indian needs/costs, with faster response 1275 98
time), ii) scale & manufacturing expertise, and iii) ability to offer complete solutions. 1000 62
725 26
‘Last man standing’ opportunity in ICE, engine upgrades boost core outlook
Curtailment of fresh investments in ICE components globally, India’s inherent cost- 450 -10
Mar-23May-23 Jul-23 Sep-23Nov-23Jan-24Mar-24
competitiveness and other export tailwinds (e.g. China Plus One) provide room for SPRL SPRL IN Equity (LHS) Rel to Nifty (RHS)
to grow as ‘the last man standing’ in its domain. IC engine upgrades (global OEMs
bringing out next-gen, more efficient IC engines, lasting well into the next decade) and
rising penetration of ‘greener’ variants of ICE such as Hybrid/CNG/ biofuels, etc. enhance
the outlook for the core business; the recent slowdown in EVs (globally & locally) also
adds to growth longevity. SPRL’s exposure to perceived high-risk ICE-2Ws is sub-20%.
Chirag Jain
Fast-expanding capabilities in EVs/powertrain-agnostic components, via M&A chirag.jain@emkayglobal.com
SPRL has diversified its presence into: i) core EV products like motors and controllers via +91 22 6624 2428
purchase of ~66% stake in Coimbatore-based EMFI (that has capabilities in BLDC hub
Jaimin Desai
motors, inner rotor motors and controllers, power electronics, etc.), and ii) powertrain- jaimin.desai@emkayglobal.com
agnostic technology-intensive parts via 62% stake purchase in Takahata (high-precision +91 22 6612 1334
injection-molding components). These combined can contribute ~10% of FY26E sales.
Vijay Naraharisetty
Attractively valued; 17% EPSg, net cash BS, 20% RoE, 9% FCF yield vijay.naraharisetty@emkayglobal.com
+91 22 6612 1306
We build-in 13% FY24E-26E sales CAGR, on: i) above-industry-growth (akin to history)
on higher content, incl. exports; ii) high aftermarket focus (17% rev. share); iii) ramp- Nandan Pradhan
nandan.pradhan@emkayglobal.com
up of recent acquisitions; our EPS CAGR is 17%. We value SPRL at 18x FY26E PER, 20% +91 22 6612 1238
premium to peers such as Craftsman, Sansera for superior franchise & growth outlook.
Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>Please refer to the last page of the report on Restrictions Refer to Important Disclosures at the end of this report
on Distribution. In Singapore, this research report or research analyses may only be distributed to Institutional Investors, Expert Investors or
Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
Shriram Pistons & Rings (SPRL IN) India Equity Research | Initiating Coverage
Story in charts
Exhibit 1: SPRL commands ~40-45% market share in core products Exhibit 2: Enjoys a well-diversified revenue profile; exposure to the
in IC engines; has over 90% market share in CNG perceived high-risk ICE 2W segment is sub-20%
OEMs Aftermarket Exports

SPRL - Market share (%)
100 90 19%
80
60
~40-45
40
17%
20
64%
0
ICE, across segments CNG vehicles
Source: Company, Emkay Research Source: Company, Emkay Research
Exhibit 3: ICE and non-BEV alternative fuels like hybrids, CNG, flex- Exhibit 4: The company’s revenue growth has outperformed
fuels, etc. expected to be major contributors to 2030 fuel mix underlying auto production by 7%/10% in the past 10Y/5Y
MSIL - Fuel-wise mix expectation in 2030 FY13-23 FY18-23
ICE HEV BEV 12% 10%

15% 9%
10% 9%
8% 7%
6%
4% 3%
2%
25% 0%
60%
-2%
-4% -2%
Auto production CAGR SPRL revenue CAGR SPRL outperformance
Source: Company presentation Source: SIAM, Company, Emkay Research
Exhibit 5: India increasingly emerging as a sourcing hub at the global level; new IC engine upgrades provide enhanced growth visibility
Company Comment Reference
"We do a lot of things for India, but it’s really India for the world. We have a great value base, a great cost base …
Stellantis Link
components are being shipped from here"
Maruti Suzuki (MSIL) "India could be the last one standing with internal combustion engine (ICE) technology" Link
Cummins Investing in a new ICE platform; targets improving IC engine efficiency by up to 25% by 2030 Link
Caterpillar Caterpillar investing USD725mn in new large engine plant Link
"It makes more sense for the companies to look for alternative sources of supply chain management, and India
Mahle Link
offers a viable option in that regard as the cost of operating operations in China increases due to various reasons."
Source: Company, Emkay Research
Exhibit 6: Several OEMs expect the pace of electrification to be slower than initially expected

"As the COVID shock retreated, we learned that as you scale EVs to 5,000 to 7,000 units a month and you move
Ford into the early majority customer, they are not willing to pay a significant premium for EVs. This is a huge moment Link
for us ... It's going to take time more than we expected 18 months ago."
"It's true, the pace of EV growth has slowed, which has created some uncertainty … Our forward plans include
General Motors Link
bringing our plug-in hybrid technology to select vehicles in North America"
"We think plug-in hybrids will stay relevant for many years … I don't think our ICE customers long-term would
Mercedes Benz accept if that is like then, when the next gen comes, a BEV story only. … We can produce combustion engine cars Link
well into next decade."
Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>.Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research
analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
March 14, 2024 |2
Exhibit 7: We build-in 13% revenue CAGR over FY24E-26E Exhibit 8: EBITDA to compound at 15%, with sustained margins of
around 21.6% (21.9% achieved in 3QFY24)
Revenues Revenue growth YoY EBITDA EBITDA Margin

45,000 12 40 9,000 21.6 25.0
29 20.9 21.2
26 14
40,000 8,000
18 30 17.6
35,000 18 7,000 16.9 20.0
13 20 15.0 14.7
30,000 6,000 13.5
10 15.0
Rs mn
25,000 11.3
Rs mn
(1) 5,000
%
20,000 (18) 4,000
-
10.0
15,000 3,000
17,294
19,549
16,068
15,966
20,647
26,093
30,660
34,952
39,146
(10)
10,000
2,926
2,938
3,045
4,604
6,408
7,410
8,456
2,000
2,155
(20) 5.0
1,820
5,000 1,000
0 (30) 0 -
FY18 FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E FY18 FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E
Source: Company, Emkay Research Source: SIAM, Company, Emkay Research
Exhibit 9: We expect profit CAGR at 17% over FY24E-26E Exhibit 10: SPRL has a net-cash balance sheet
Adj. PAT Growth YoY Net debt/Equity (x) Net Debt/EBITDA (x)
7,000 84 80 100
0.2 (0.0) 0.0 (0.0)
6,000 80 (0.1) (0.2)
0.0 (0.2)
46 (0.3) (0.4)
60 -0.2 0.0 (0.4)
5,000 (0.1) (0.1)
22 40 -0.4
4,000 18 17
Rs mn
18 -0.6
20
%
(0)
3,000 -0.8
- (0.7) (0.7)
-1.0 (0.8)
2,000 (0.9)
… (20) -1.2
5,059
5,939
1,636
2,943
4,303
1,000 (1.1)
1,385
1,389
(40) -1.4
887
730
(1.4)
0 (60) -1.6
Exhibit 11: SPRL to continue posting healthy cash generation; we Exhibit 12: RoE to sustain above 20% levels; RoCE also in healthy
factor-in ~Rs2bn capex each year, over FY24E-26E double-digits
RoE (%) RoCE (Post-Tax-%)

CFO Capex FCF
30.0
6.7
8.0
5.8
7.0 25.0
4.8
4.7
6.0
4.0
3.8
5.0 20.0
3.0
2.8
2.7
Rs bn
2.2
4.0
2.0
2.0
2.0
1.9
1.7
1.7
1.7
1.6
1.6
15.0
1.4
1.3
1.2
3.0
1.0
0.7
0.6
0.5
2.0
1.0 10.0
0.0
13.6
16.3
13.9
14.3
13.1
11.0
21.2
16.5
25.3
19.6
24.2
19.4
23.4
19.1
5.0
6.7
7.0
5.0
8.0
-1.0
(0.2)
FY24E
FY25E
FY26E
FY18
FY19
FY20
FY21
FY22
FY23
0.0
FY18 FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E
Exhibit 13: SPRL is trading at ~12.5x PER on one-year forward basis
1-year forward P/E (x) 5-year average P/E +1 STD -1 STD

25
20
15
(x)
10
0
Sep-19
Sep-20
Sep-21
Sep-22
Sep-23
Mar-19
Mar-20
Mar-21
Mar-22
Mar-23
Mar-24
Source: Bloomberg, Emkay Research
March 14, 2024 |3
Table of Contents
Initiate coverage with BUY, 70% upside .......................................................... 5
Enhancing dominant positioning in core products as well as CPV ........................ 8
‘Last man standing’ opportunity in ICE, engine upgrades boost outlook for core .... 14
Expanding capabilities in EVs/powertrain agnostic tech components via M&A ..... 19
Financials: Expect 13/15/17% CAGR in revenue/EBITDA/PAT in FY24E-26E ....... 21
Key risks and concerns ............................................................................... 23
Annexure – Company background ................................................................ 24
March 14, 2024 |4
We initiate coverage on Shriram Pistons with a BUY

recommendation, 70% upside
 Dominant 40-45% share in core products across segments: SPRL, with an over 5-
decade experience and presence across segments (2Ws, PVs, CVs, Railways, Defence), is
the leader in its core products (pistons, piston pins and rings, engine valves; has 90%
share in CNG engines; supplier of pistons for Tata/AL hydrogen buses on trials), aided by:
i) four strong decades-old tech partnerships, augmented by in-house R&D capability
(adapting global knowledge/technology to Indian needs/costs, with faster response time),
ii) operational scale, and iii) ability to offer complete solutions.
 ‘Last man standing’ opportunity in ICE, engine upgrades boost core outlook:
Curtailment of fresh investments in ICE globally (in line with other spaces like forgings,
halogen lights, etc. within automotive), India’s inherent cost-competitiveness and other
export tailwinds (e.g., China Plus One) provide room for growth to SPRL, to become the
‘last man standing’ in its domain. IC engine upgrades (global OEMs bringing out next-gen,
more efficient IC engines lasting well into next decade) and rising penetration of ‘greener’
variants of ICE such as Hybrid/CNG/ biofuels, etc. enhance the outlook for the core
business, including higher CPV opportunities; the recent slowdown in EVs (globally &
locally) can also add to longevity. SPRL’s ICE-2W exposure is sub-20%.
 Expanding capabilities in EVs/powertrain agnostic tech components via M&A:
SPRL has set up a dedicated subsidiary for addressing any electrification threat and drive
future investments/expansion beyond core product categories. It has entered i) core EV
products like motors and controllers via purchase of ~66% stake in Coimbatore-based
EMFI (having capabilities in BLDC hub motors, inner rotor motors and controllers, power
electronics, etc.), and ii) powertrain-agnostic parts via 62% stake purchase in Takahata
Precision (high-precision injection-molding components). These combined can contribute
~10% of FY26E sales.
 Attractively valued dominant franchise; 17% EPS CAGR, net cash BS, 20% RoE,
9% FCF yield: We build-in 13% FY24E-26E revenue CAGR: on i) above-industry-growth
(akin to history of outperformance) due to higher content, including exports; ii) high focus
on aftermarket (17% revenue contribution); iii) strategic M&As; our EPS CAGR stands at
17%. We believe valuations at ~11x FY26E PER are attractive, given SPRL’s leadership
market positioning and robust financials (cash-positive balance sheet, with >20% return
ratios). We initiate coverage on SPRL with a BUY recommendation and 70% upside.
Comparable engine-part players like Craftsman and Sansera trade at ~14-15.5x FY26E
PER. We value SPRL at 18x FY26E PER i.e., 20% premium to peers on superior franchise
and growth outlook.
Exhibit 14: Revenue model – We expect CAGR of 13/15/17% in revenue/EBITDA/EPS, respectively, over FY24E-26E
Rs mn FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E

Revenue 19,549 16,068 15,966 20,647 26,093 30,660 34,952 39,146
Growth YoY (%) 13.0 -17.8 -0.6 29.3 26.4 17.5 14.0 12.0
EBITDA 2,938 1,820 2,155 3,045 4,604 6,408 7,410 8,456
EBITDA margin (%) 15.0 11.3 13.5 14.7 17.6 20.9 21.2 21.6
EBIT 1,995 790 1,130 2,024 3,656 5,376 6,235 7,229
EBIT margin (%) 10.2 4.9 7.1 9.8 14.0 17.5 17.8 18.5
Interest 139 124 126 114 193 281 256 229
PBT 2,092 864 1,200 2,202 3,930 5,748 6,763 7,940
Tax rate (%) 33.8 15.5 26.0 25.7 25.2 25.2 25.2 25.2
PAT 1,385 730 887 1,636 2,943 4,303 5,059 5,939
PAT margin (%) 7.1 4.5 5.6 7.9 11.3 14.0 14.5 15.2
EPS (Rs) 30.9 16.3 19.8 37.1 66.8 97.7 114.8 134.8
Capex 1,519 2,297 501 818 1,252 2,000 2,000 2,000
% of sales 7.8 14.3 3.1 4.0 4.8 6.5 5.7 5.1
Net debt 79 (212) (1,427) (2,202) (3,812) (5,607) (8,210) (11,604)
Net D/E (x) 0.0 0.0 -0.1 -0.2 -0.2 -0.3 -0.4 -0.4
FCF (181) 1,262 1,446 1,579 2,733 2,847 3,770 4,692
Post-tax ROCE (%) 13.1 5.0 6.7 11.0 16.5 19.6 19.4 19.1
Source: Company, Emkay Research; Note: Historical EPS here is adjusted for 1:1 bonus issue in FY24
March 14, 2024 |5
Exhibit 15: SPRL trades at a steep discount to other powertrain-heavy competition, despite its strong positioning, superior balance sheet,
and return ratios
Shriram Pistons (SPRL) Craftsman Automation Sansera Engineering

FY23 revenue (consol.; Rs bn) 26 32 23
Powertrain parts (Crankcase, Covers,
Cylinder Head, wheel hub,
Transmission housing, Gear box Engine parts (like connecting rods,
Powertrain parts - pistons, piston housing), EV parts (Battery Housings, rocker arms – below), transmission
rings, piston pins, engine valves Cooling Trays, motor housing), parts, Steering and suspension parts,
Structural Parts (Cradle, water pump braking parts
inlet pipe, Air intake manifold,
camcover & oil filter housing
Products
Share of powertrain parts in

Upto 95% Upto ~90% ~75%
profitability (%)
Market leader in machining of
Positioning in powertrain 40-45% market share in core Leading player in connecting rods,
powertrain products like cylinder heads
products products rocker arms
and blocks for CVs, tractors
Share of 2Ws in revenue Below 20% Upto ~15% Over 42% as of 9MFY24
9MFY24 - 69% India, 18% Europe, 10%
Geographical revenue mix India 80%, Exports 20% India ~92% , Exports ~8%
USA, 3% Others
Ashok Leyland, Daimler, Hyundai, Kia,
Key clients All major OEMs across segments M&M, TVSL and Royal Enfield are major No customer forms over 15% of sales
customers
Share of aftermarket in
17% in FY23 Single digit None/not material
revenues (%)
Revenue CAGR
FY19-24E 9% 20% 11%
FY24E-26E 13% 13% 17%
EPS CAGR
FY19-24E 25% 27% 13%
FY24E-26E 17% 25% 31%
Net Debt/Equity (x)
FY24E -0.3
Rs6.8bn Net debt in FY26E as per Rs4.6bn Net debt in FY26E as per
FY25E -0.4
Bloomberg consensus Bloomberg consensus
FY26E -0.4
RoE (%)
FY24E 25.3% 21.7% 14.6%
FY25E 24.2% 22.3% 16.8%
FY26E 23.4% 22.6% 18.1%
PER (x)
FY25E 12.6 19.5 18.1
FY26E 10.7 15.3 14.2
Source: Bloomberg, Emkay Research; Note: Financial projections for Craftsman and Sansera on consol. basis, as per Bloomberg consensus
Exhibit 16: SPRL is trading at ~12.5x PER on one-year forward basis
1-year forward P/E (x) 5-year average P/E +1 STD -1 STD

25
20
15
(x)
10
0
Sep-19
Sep-20
Sep-21
Sep-22
Sep-23
Mar-19
Mar-20
Mar-21
Mar-22
Mar-23
Mar-24
March 14, 2024 |6
Exhibit 17: Valuation comparison – SPRL vs other auto companies
ROE (%) P/E (x) EV/EBITDA (x) EPS Growth (%)

FY24E FY25E FY26E FY24E FY25E FY26E FY24E FY25E FY26E FY24E FY25E FY26E
2W OEMs
Bajaj Auto 29.9 35.9 38.6 31.2 26.8 24.9 24.2 20.4 18.7 35.0 16.5 7.8
TVS Motor 31.5 35.8 33.8 46.8 32.0 26.8 28.8 20.2 16.8 46.2 46.1 19.5
Hero Motocorp 24.2 25.0 25.6 21.7 19.9 18.2 15.4 13.5 12.4 42.6 9.3 9.0
Eicher Motors 24.9 23.0 20.4 25.2 23.3 22.8 20.6 18.2 16.9 39.0 8.0 2.2
Average 29.9 25.7 23.6 22.1 18.4 16.6
PV + CV OEMs
Maruti Suzuki 17.3 14.8 15.1 29.2 28.4 25.2 18.7 16.9 14.7 46.6 2.7 12.5
Tata Motors 38.1 29.8 27.3 17.6 15.6 12.9 7.3 6.4 5.5 2789.5 13.0 20.4
Mahindra & Mahindra 22.3 18.4 16.7 21.9 22.7 21.9 17.1 15.8 14.7 32.2 -3.8 3.7
Ashok Leyland 28.4 26.7 24.1 18.5 17.6 17.6 10.6 10.7 10.4 95.8 4.8 0.2
Escorts Kubota 13.9 13.3 13.9 24.5 23.0 19.9 19.1 16.0 13.3 107.8 6.2 15.5
Average 21.4 20.5 18.1 10.9 9.8 8.7
Battery Ancillaries
Amara Raja Energy & Mobility 15.0 14.5 13.5 15.7 14.4 13.7 8.5 7.6 7.0 14.6 9.5 4.7
Exide Industries 9.0 9.5 10.2 24.6 21.9 19.0 14.1 12.7 11.4 15.2 12.3 15.3
Average 20.6 18.5 16.8 11.6 10.4 9.5
Auto Ancillaries
Samvardhana Motherson International 9.9 14.8 17.2 32.8 20.0 15.4 9.7 7.0 6.1 42.8 63.9 29.6
Bharat Forge 17.0 16.2 16.4 37.7 35.2 30.9 22.8 21.0 18.6 26.3 7.1 13.7
Uno Minda 18.2 18.5 18.6 43.3 36.2 30.8 24.1 20.2 17.2 25.5 19.6 17.4
Ramkrishna Forgings 23.9 21.8 19.4 28.3 25.0 23.9 13.9 12.3 10.9 50.4 13.3 4.6
Motherson Sumi Wiring India 43.9 50.8 57.9 42.4 31.1 23.9 27.6 21.1 16.4 31.4 36.3 30.2
Suprajit Engineering 12.0 17.0 19.2 36.0 22.6 17.3 17.5 12.9 10.1 1.1 59.5 30.2
Pricol 17.7 21.9 25.4 30.7 21.1 15.0 15.1 11.4 8.6 17.1 45.3 40.6
Sansera Engineering* 14.6 16.8 18.1 24.2 18.1 14.2 11.7 9.6 8.1 34.9 34.3 27.0
Craftsman Automation* 21.7 22.3 22.6 24.0 19.5 15.3 10.5 9.1 7.9 36.3 22.6 27.4
CIE Automotive* 15.0 15.3 16.0 17.3 15.1 13.9 9.7 8.9 8.4 -13.9 14.3 8.7
Endurance Tech* 13.7 16.3 17.4 37.8 28.1 23.3 18.5 14.9 12.7 33.8 34.7 20.4
Varroc* 33.3 20.1 22.1 16.3 17.9 12.4 10.6 8.7 7.6 -151.0 -8.6 43.6
Gabriel* 18.2 18.1 18.6 25.2 21.1 17.5 13.1 11.3 9.8 37.6 19.5 20.8
Sandhar* 11.2 13.7 14.9 25.6 18.3 14.9 10.0 8.5 7.6 45.0 39.5 23.2
Minda Corp* 21.4 16.1 17.3 37.3 27.3 21.7 18.1 14.9 12.4 -13.8 36.6 26.0
Shriram Pistons & Rings 25.3 24.2 23.4 14.8 12.6 10.7 9.1 7.5 6.2 46.2 17.6 17.4
Average 31.6 24.2 19.7 14.1 11.2 9.8
Tyre Ancillaries
Apollo Tyres 14.2 14.5 14.9 16.3 14.5 12.8 7.8 7.0 6.2 77.5 12.0 13.0
JK Tyre 22.2 22.0 21.1 11.9 9.8 8.4 6.6 6.1 5.3 160.3 21.6 16.6
CEAT* 18.5 16.2 15.8 14.3 14.4 12.8 7.2 7.1 6.6 221.0 -0.8 12.5
MRF* 13.9 12.7 12.3 26.8 25.6 23.6 13.4 12.7 11.9 198.9 4.9 8.5
BKT* 16.3 17.9 18.6 33.5 27.2 22.7 21.0 17.4 15.0 24.8 23.0 19.8
Average 22.3 19.7 17.6 11.1 10.2 9.2 517.3 510.7 430.5
Source: Bloomberg, Emkay Research; Note: *denotes Bloomberg consensus
March 14, 2024 |7
Enhancing dominant positioning in core products as well

as CPV
 SPRL enjoys strong presence in its core products (pistons, piston pins, piston
rings and engine valves), with ~40-45% market share across categories; further
the company’s financials are much superior compared with competition (two-
third revenue market share, over 85% profit pool share).
 The company’s dominant positioning is driven by its decades-old technical
partnerships with international leaders from Germany and Japan, its increasing
focus on improving indigenous R&D capability, its size of operations, and its
varied experience across vehicle segments and the non-auto space, which enable
greater agility for responding to ongoing changes in the powertrain space.
 SPRL is ramping up efforts to bolster its already strong positioning in core
products, by undertaking development of solutions for alternative, more
environment-friendly IC engine options like CNG (has over 90% market share)
and hydrogen (in the advanced testing stage); these would also be positive from
the content-per-vehicle (CPV) point of view.
[A] Dominant in core products, with ~40-45% market share; much superior
financials compared with peer companies
 SPRL has over 5 decades of experience in its core products (pistons, piston pins, piston
rings, and engine valves), with diversified presence across end-user segments (2/3Ws,
PVs, CVs, Off-Highway, Railways and Defence). Over time, it has come to dominate the
domestic industry in its domain, and possesses ~40-45% market share across segments.
It has been able to develop and maintain strong relationships with leading OEMs across
segments (~64% revenue contribution from OEMs in FY23); exports/aftermarket channels
form ~19%/~17% of revenue, as of FY23. The company is the largest exporter of pistons
and rings from India; it serves global marquee customers like Perkins, Fiat Powertrain,
Cummins, Yanmar, BMW, Daimler, Kubota, etc.
Exhibit 18: SPRL commands ~40-45% market share in its core products in IC engines; in newer
powertrains like CNG, Company commands over 90% market share
SPRL - Market share (%)
100 90
80
60
~40-45
40
20
0
ICE, across segments CNG vehicles
 The company dominates the industry in key P&L, BS, and return-ratio metrics (two-third
revenue market share, over 85% profit pool share; refer to Exhibits 21-24). Its robust
positioning is driven by: i) strong tech partnerships (four global tie-ups; oldest in force
since 1965), ii) separate in-house R&D capabilities (combining global knowledge with
Indian manufacturing, shortens response time), and iii) scale of operations.
March 14, 2024 |8
Exhibit 19: SPRL has a healthy ~36% contribution from exports and aftermarkets, as of FY23
OEMs Aftermarket Exports
19%
17%
64%
Source: Company
Exhibit 20: The company’s revenue growth has outperformed that of underlying auto production
by 7%/10% in the past 10Y/5Y
FY13-23 FY18-23
12% 10%
9%
10% 9%
8% 7%
6%
4% 3%
2%
0%
-2%
-2%
-4%
Auto production CAGR SPRL revenue CAGR SPRL outperformance
Source: SIAM, Company, Emkay Research
Exhibit 21: SPRL dominates its space with nearly two-thirds revenue market share
Revenue (Rs mn) FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Shriram Pistons 10,525 11,697 12,444 13,930 14,626 17,294 19,549 16,068 15,966 20,647 26,050
IP Rings 952 949 1,126 1,317 1,914 2,067 2,121 1,979 1,985 2,727 3,233
Rane Engine Valve 2,628 2,659 3,952 3,496 3,602 3,793 4,264 3,590 3,049 3,872 5,024
Federal Mogul Ignition Products 897 1,013 1,133 1,361 1,464 1,454 1,541 1,999 2,353
Menon Pistons 1,527 1,420 1,444 1,304 1,328 1,461 1,561 1,178 1,371 2,011 2,082
Total 15,631 16,725 19,862 21,060 22,602 25,976 28,958 24,269 23,911 31,255 38,742
Revenue mkt share (%) FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Shriram Pistons 67.3 69.9 62.7 66.1 64.7 66.6 67.5 66.2 66.8 66.1 67.2
IP Rings 6.1 5.7 5.7 6.3 8.5 8.0 7.3 8.2 8.3 8.7 8.3
Rane Engine Valve 16.8 15.9 19.9 16.6 15.9 14.6 14.7 14.8 12.8 12.4 13.0
Federal Mogul Ignition Products - - 4.5 4.8 5.0 5.2 5.1 6.0 6.4 6.4 6.1
Menon Pistons 9.8 8.5 7.3 6.2 5.9 5.6 5.4 4.9 5.7 6.4 5.4
Source: Company, Capitaline, Emkay Research
March 14, 2024 |9
Exhibit 22: Company commands over 85% share of the profit pool, with much superior profitability relative to peers
EBITDA mkt share (%) FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Shriram Pistons 86.7 96.3 76.0 87.1 80.3 82.0 79.8 79.0 82.7 76.9 81.0
IP Rings 2.6 4.1 5.1 5.7 4.6 6.8 7.5 9.4 9.4 8.4 4.5
Rane Engine Valve 4.1 -4.1 12.1 1.6 7.2 4.0 5.0 4.8 -1.2 2.7 4.9
Menon Pistons 6.6 3.7 5.8 4.3 4.7 4.4 5.1 4.7 6.5 7.7 5.6
EBITDAM (%) FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Shriram Pistons 17.1 19.6 15.3 16.7 17.4 16.9 15.0 11.3 13.5 14.7 17.8
IP Rings 5.6 10.2 11.4 11.5 7.6 11.7 13.0 10.9 12.4 12.1 8.0
Federal Mogul Ignition Products 2.6 3.6 8.9 7.2 6.6 3.5 4.4 8.6 9.7
Menon Pistons 9.0 6.2 10.1 8.7 11.2 10.8 11.9 9.1 12.4 15.2 15.3
Total 13.3 14.2 12.6 12.7 14.1 13.7 12.7 9.5 10.9 12.7 14.8
EBIT mkt share (%) FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Shriram Pistons 105.3 121.3 83.8 105.1 89.6 91.3 88.8 101.2 100.0 81.5 85.7
IP Rings -1.3 2.6 5.4 6.2 3.6 7.3 7.9 13.5 11.5 7.6 2.3
Rane Engine Valve -14.5 -28.4 1.6 -17.5 -2.6 -6.6 -5.3 -21.8 -23.2 -3.8 2.0
Menon Pistons 10.5 4.4 8.9 5.2 5.7 5.1 6.1 6.9 10.3 10.0 6.0
EBITM (%) FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Shriram Pistons 8.8 11.0 7.6 10.0 11.3 11.7 10.2 4.9 7.1 9.8 14.2
IP Rings -1.2 3.0 5.4 6.3 3.4 7.8 8.4 5.3 6.5 6.9 3.1
Rane Engine Valve -4.9 -11.3 0.5 -6.7 -1.3 -3.9 -2.8 -4.7 -8.6 -2.4 1.7
Menon Pistons 6.1 3.3 7.0 5.3 7.9 7.8 8.8 4.6 8.5 12.3 12.5
Total 5.6 6.3 5.7 6.3 8.2 8.5 7.8 3.2 4.7 7.9 11.1
Exhibit 23: The company has a net-cash balance sheet, unlike several peers
Net Debt/Equity (x) FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Shriram Pistons 0.8 0.6 0.5 0.2 0.1 -0.0 0.0 -0.0 -0.1 -0.2 -0.2
IP Rings 1.0 1.4 1.6 2.1 0.7 0.7 0.8 0.7 0.9 1.0 0.9
Rane Engine Valve 1.1 2.2 1.3 1.4 0.5 0.7 1.0 1.1 0.9 1.3 1.2
Federal Mogul Ignition Products -0.1 -0.0 -0.1 -0.0 -0.0 -0.1 -0.1 -0.2 -0.1
Menon Pistons 0.4 0.4 0.3 0.2 0.1 0.1 0.0 -0.0 -0.0 0.3 0.1
Net Debt/EBITDA (x) FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Shriram Pistons 2.2 1.4 1.5 0.7 0.2 -0.1 0.0 -0.1 -0.7 -0.7 -0.8
IP Rings 8.6 5.9 5.1 5.5 4.0 2.8 2.8 3.2 3.8 3.3 3.7
Federal Mogul Ignition Products -1.6 -0.6 -0.4 -0.1 -0.1 -1.0 -1.8 -1.2 -0.4
Menon Pistons 1.5 2.4 1.2 1.0 0.4 0.4 0.0 -0.0 -0.1 0.8 0.5
Exhibit 24: Return ratio profile at SPRL is also superior than competition’s
Avg. RoE (%) FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Shriram Pistons 10.2 13.1 9.8 11.3 15.9 16.3 14.3 7.0 8.0 13.6 21.2
IP Rings -8.9 -6.2 -1.1 0.5 -2.3 8.2 8.1 1.1 4.8 7.6 1.6
Rane Engine Valve -13.2 14.4 -12.8 -27.7 -9.5 -11.3 -10.1 -13.7 -26.3 -8.2 -7.0
Menon Pistons 8.5 3.4 9.7 7.0 11.6 10.1 13.4 5.8 11.3 20.0 22.3
March 14, 2024 |10
[B] Strong technological partnerships, improving in-house R&D and varied

segment exposure act as key competitive advantages
 SPRL’s longstanding technical collaborations with leading international technology
providers such as Germany-based KS Kolbenschmidt GmbH (in pistons for diesel and
gasoline engines, since 1972), Japan-based Riken Corporation (in piston rings, since 1978)
and Fuji Oozx (in engine valves, since 1990) have helped the company to consistently
bring the latest technological solutions to the domestic market – which, combined with
SPRL’s frugal engineering expertise, have resulted in the company constantly expanding
capabilities. It also has a partnership with Japan’s Honda Foundry (for supplying to the
Honda group, since 1987).
 Besides such arrangements, SPRL has been focusing on in-house R&D too, to further
improve its competitiveness and agility to address market changes and to reduce costs;
the company has a state-of-the-art tech center in Ghaziabad, Uttar Pradesh, with over 150
engineers on board and facilities, such as test rigs for itself and clients.
Exhibit 25: SPRL has longstanding technical arrangements with players from Germany and Japan
Name Country Year Area of collaboration Partner Locations

KS Kolbenschmidt GmBH Germany 1972 For pistons for diesel and gasoline engines Europe, Asia, North & South America
Riken Corporation Japan 1978 For piston rings Asia, North America, Europe
Honda Foundry Co. Japan 1987 For supplying to the Honda group NA
Fuji Oozx Inc Japan 1990 For engine valves Korea, Taiwan, & United States.
 Company’s rich experience across various end-user segments in auto and non-autos, apart
from its technical capabilities, is serving it well in current times of accelerated changes in
the powertrain domain (driven by tightening requirements around emissions; e.g., in the
gradual transition from BS-II/III to BS-VI) with respect to development of necessary
products/solutions. SPRL has been developing solutions to cater to the rise of ‘greener’
and relatively competitive (vs EVs) ICE engine variants (like CNG, hydrogen, flex fuels, bio
fuels, etc.) – it already commands over 90% market share in CNG and has provided testing
samples for hydrogen engines (now in advanced testing stage). SPRL is a supplier for
TTMT/AL hydrogen buses on trials.
 Efforts to address opportunities in newer ICE variants would be beneficial for content per
vehicle (CPV), apart from acting as a further competitive advantage, given the long lead
times required for re-design, re-development, and validation for such products.
Exhibit 26: CNG penetration has risen rapidly, amid expanding outlet network and increasing
availability of products; for leader MSIL, CNG forms ~27% of domestic volumes in FY24YTD
MSIL's CNG sales ('000 units - LHS) CNG penetration in MSIL's domestic sales (% - RHS)
26.6
400 30
23.3
19.3
350
25
17.2
300
20
250
10.8
200 15
150
6.4
6.1
10
5.2
100
5
50
75 105 107 158 234 329 330 358
0 0
FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24YTD
Besides MSIL (~74% market share), other players like TTMT are also increasing
offerings with CNG
“We see that in 2030, there will be a major shift. Today, the CNG segment is roughly 10-12
per cent of the total passenger vehicle market, electric will be about 2 per cent, 15 per cent
will be diesel, and the rest would be petrol. If I have to imagine 2030, I think 25 per cent plus
or 25-30 per cent will be CNG, electric should be around 30 per cent, diesel will come down
significantly. It will be sub 5 per cent and the rest would be flex fuel and petrol. This is the
shift; therefore, we are preparing ourselves for the 2030 situation. That’s why we are bringing
new innovations in CNG. We will keep upping the game on the CNG side.”
- Comment by Shailesh Chandra, MD, TTMT Passenger Vehicles, in Oct-23 (link)
March 14, 2024 |11
Exhibit 27: TTMT expects CNG to contribute up to 30% of the mix by 2030 (vs. 10-12% now);
other ICEs, including flex fuels, to form 40%, with BEV penetration seen at 30%
TTMT - Fuel-wise mix expectation in 2030
Other ICE incl. flex fuels CNG BEV
30%
40%
30%
Source: Company
BJAUT to introduce the world’s first CNG motorcycle by next quarter
“From the point of view of the environment … we can see that compared to a gasoline
motorcycle, Co2 is down by almost 50%, CO is down by like 75% and non-methane
hydrocarbons are down by like 90%. So, this is a motorcycle that's potentially fantastic for the
environment. But equally, it promises to do what Hero Honda did 40 years ago, which was
effectively to double mileage or halve the cost of fuel for the Aam Aadmi, which I think has a
fantastic impact on the wallets of those consumers … within the next quarter, we will launch
the world's first CNG motorcycle.”
- Comment by Rajiv Bajaj, MD, BJAUT, in Mar-24 (link)
SPRL has come up with in-house designed solutions for alternative IC applications
“We are happy to announce that we have created a 170 diameter piston for use in large
generator sets. Moreover, we offer pistons for applications involving hydrogen and CNG.
The hydrogen pistons require an entirely new design, mostly due to the fact that hydrogen
requires a greater compression ratio. Also, as you can see, the ball body must be made with a
very deep type of machining and the product as a whole is one of a kind. These have all been
designed locally since we have done so using our in-house research and development
capabilities that we have built up over the years.”
“We are prepared for green hydrogen, and flex-fuel and Natural Gas (NG) engines.
As a manufacturer, today we are delivering piston pins for the majority of the players. Having
a major market share in the industry we have to service an entire range. These applications
need a completely new design, and the strength which we bring to the table is our R&D.
We have been developing it for over a decade. We have an in-house engineering team
that is well-equipped to align with emerging trends. As a testimony, we have in-
house solutions for LNG and CNG.”
- Comments by Krishnakumar Srinivasan, MD & CEO, SPRL (link and link)
March 14, 2024 |12
Exhibit 28: Pistons for hydrogen engines for heavy CVs Exhibit 29: Pistons for CNG engines for CVs
Source: Company Source: Company
Exhibit 30: Pistons for marine LNG engine application
Source: Company
March 14, 2024 |13
‘Last man standing’ opportunity in ICE, engine upgrades

boost outlook for core
 Fresh investments in ICE technology are drying up globally, amid the ongoing
transition towards EVs – this is hence opening up opportunities for Indian engine
suppliers
 SPRL has outlined its intention to become ‘the last man standing’ for IC engines
globally
 Upgrades of existing IC engines and rising hybrid sales offer further pockets of
opportunity for players like SPRL
 Moderation in the pace of EV adoption has been observed in recent times in

several large western markets, with several OEMs less confident about the speed
of change; could potentially enhance growth visibility for the likes of SPRL, if
moderation sustains
[A] Slowing global ICE investments, other export drivers to benefit Indian
players
 Declining investments in ICE technology globally by OEMs and component suppliers (driven
by impending electrification) provide a strong opportunity for Indian players in the IC
engine space, for serving such demand (similar to the trend visible in other pockets within
automotive, like forgings, halogen lights, etc.).
 This is further accentuated by India’s inherent cost-competitiveness/frugal engineering

expertise, along with strong government focus on exports (‘Make in India’ initiative, PLI
schemes) and geopolitical tailwinds like ‘China Plus One’.
 To this effect, SPRL has already outlined its intention to be ‘the last man standing’ in its
space, aiming to service the last IC engine produced globally, by leveraging on its global
technology-domestic manufacturing advantage, to respond to opportunities with greater
agility than competition.
Exhibit 31: India increasingly emerging as a viable sourcing hub at the global level; new IC engine upgrades globally provide enhanced
growth visibility

"We do a lot of things for India, but it’s really India for the world. We have a great value base, a great cost base …
Stellantis Link
components are being shipped from here"
MSIL "India could be the last one standing with internal combustion engine (ICE) technology" Link
Cummins Investing in a new ICE platform; targets improving IC engine efficiency by up to 25% by 2030 Link
Caterpillar Caterpillar investing USD725mn in new large engine plant Link
"It makes more sense for the companies to look for alternative sources of supply chain management, and India offers a
Mahle Link
viable option in that regard as the cost of operating operations in China increases due to various reasons."
SPRL aims to be ‘the ‘last man standing’ globally for IC engines
“We will provide maintenance for the final pistons and IC engines produced worldwide.”
- Comment by Krishnakumar Srinivasan, MD & CEO, SPRL (link)
Global OEMs like Stellantis (Jeep, Citroen) have huge plans for sourcing from India
“We do a lot of things for India, but it’s really India for the world. We have a great value
base, a great cost base, because we’re just talking about costs in isolation. You’re not talking
about quality. You heard me talk about quality as a base, in some cases India is a
benchmark for Stellantis global. If you don’t have quality, you’re not going to have costs,
you’re not going to have timing … We started with the export of gearboxes. For example, the
C5 engine is assembled in Hosur, C3 all the powertrains are assembled there. Both
the gearboxes are made there. C3 Aircross, is made with almost 100 percent
localization … We’ve already started sending the EC3 to Nepal – big focus on the Himalayan
country for electric vehicles. Indonesia, the vehicles that we have. South Africa, the vehicles
that we have. Components going to Latin America. They have a huge manufacturing
setup there, but components are being shipped from here.”
- Comments in an interview by Billy Hayes, Senior Vice President, India and Asia
Pacific Region, Stellantis (link)
March 14, 2024 |14
Players like Mahle are looking at India as a viable manufacturing location
“It makes more sense for the companies to look for alternative sources of supply
chain management, and India offers a viable option in that regard as the cost of
operating operations in China increases due to various reasons.”
“We are seeing some of our competitors go out. However, we will stay. Size matters, not
the number of plants”
- Martin Wellhoffer, Vice President of Sales, Mahle in Feb-23 (link)
[B] Engine upgrades, rising penetration of hybrids are added growth drivers
 The pace of electrification/technological disruption would vary by segment both, globally

and locally; in the meantime, i) attempts continue for improving the efficiency of existing
IC engines (e.g., heavy duty engine-maker Cummins Inc. targets 20-25% improvements
by the end of the decade), and ii) increasing penetration of bridging technology like
hybrids, would also enhance opportunities for players like SPRL.
MSIL expects 25%/32% penetration of hybrids/alternate fuels by 2030
“India could be the last one standing with internal combustion engine (ICE)
technology … Faster adoption of alternative fuels like bio-CNG, ethanol along with EVs and
hybrids will result in faster decarbonization going forward. By 2030, we estimate about 15%
of total car sales to be electric while a large portion of about 85% is still going to be
ICE-related technologies – this includes 25% hybrid electric vehicles (HEVs), 28%
ICE vehicles, and 32% vehicles driven on alternate fuels. Currently the Corporate
Average Fuel Economy (CAFÉ) norms are based on tank to wheel emissions, but we need to
consider life cycle emissions (well to wheel). For carbon neutrality, technology agnostic
approach of multiple technologies is required.”
- CV Raman, CTO, MSIL in Dec-23 (link)
Exhibit 32: MSIL expects hybrids to form 25% of volume by 2030; other fuels like CNG, biogas,
ethanol, etc. expected to contribute 32% of volume
MSIL - Fuel-wise mix expectation in 2030
ICE HEV BEV

15%
25%
60%
Source: Company presentation
Cummins is continuing to develop new IC engines; aims to improve efficiency by 20-

25% by the end of the decade
“Today, with the techniques we have with big data and analytics, we can design efficiency into
the system in a way that we couldn’t 10 or 15 years ago. We have a target to improve the
efficiency of our engines by 20% or 25% by the end of the decade … The next step is
mostly fueling; it’s not really much else to do with the engine at that point. Once you are
perfectly efficient, it’s hybridization and fuel.”
- Thomas Linebarger, CEO, Cummins Inc in an Feb-22 interview (link)
March 14, 2024 |15
“Cummins’ all-new platform takes internal combustion to a new level, capable of meeting future
ultra-low emission standards, such as EPA Tier 5 and EU Stage 6, together with a low-to-zero
carbon fuel capability to help put construction and quarrying sites on a lower cost path to
decarbonization. Moving forward, our aim is to offer the same agnostic capability across the
next-generation of our current 6.7 liter and 9 liter engine platforms.”
- Cummins Inc at the time of its ‘fuel agnostic engine platform’ launch in Mar-23 (link)
[C] Slowing EV sales globally a key monitorable; could potentially enhance longevity
for engine players like SPRL
 After a sharp rise over CY20-22, the pace of electrification in developed markets, especially
in Europe (like the UK and Germany), has slowed down in recent months/quarters –
accompanied by rising penetration of hybrids (in markets like the USA and France).
Developments around BEV penetration levels need to be watched – as an extended
slowdown/gentler pace of adoption would further enhance business/growth visibility for IC
engine suppliers.
 Similarly, even in the domestic market, the rate of EV adoption has been stable at ~5-6%
in 2Ws and ~2% in PVs over the past year
Exhibit 33: BEV penetration has stabilized in European markets like Germany and the UK in CY23;
growth has also slowed down vs. earlier years in the USA
BEV penetration in major car markets (%)
CY20 CY21 CY22 CY23
17.9 18.7
20.0 17.1 17.0
15.0 13.6
12.7
10.0 7.6 6.8 6.7

5.7
5.0 3.3
1.8
0.0
USA UK Germany
Exhibit 34: PHEV penetration is inching up slightly in some of the large car markets
PHEV penetration in some major car markets (%)
CY20 CY21 CY22 CY23
10.0 9.2
8.2 8.6 8.5
7.8 8.0
8.0
6.0 4.8
4.3
4.0
1.8
1.1 1.4
2.0
0.5
0.0
USA UK France
March 14, 2024 |16
Exhibit 35: Tesla’s market share in its home (USA) market has stabilized at ~4-5% over the past
9 quarters; in recent times, its profitability has suffered as a result of increased price-cuts in
order to push sales/demand
Tesla US car market share (% - LHS) Tesla adj. EBITDA margin (% - RHS)
6.0 30.0
5.0 25.0
4.0
20.0
3.0
15.0
2.0
10.0
1.7
1.8
1.7
1.5
1.8
1.9
2.7
4.3
4.1
3.9
4.3
3.9
5.0
4.5
4.6
4.6
1.0
1.1
1.3
1.3
0.9
1.0
0.0 5.0
Q2CY21
Q4CY18
Q1CY19
Q2CY19
Q3CY19
Q4CY19
Q1CY20
Q2CY20
Q3CY20
Q4CY20
Q1CY21
Q3CY21
Q4CY21
Q1CY22
Q2CY22
Q3CY22
Q4CY22
Q1CY23
Q2CY23
Q3CY23
Q4CY23
Source: Bloomberg, Company, Emkay Research
Exhibit 36: BEV penetration in the UK has stabilized below the Exhibit 37: Sales of alternative fuel cars, including electrics, has
earlier highs; PHEV penetration inching up in recent months declined in Germany
UK - alternative fuel sales (% penetration) Germany - alternative fuel sales (% penetration)
BEV sales PHEV sales BEV sales PHEV sales
25.0 30.0
20.0 25.0
20.0
15.0
15.0
10.0
10.0
5.0 5.0
0.0 0.0
Q1CY18
Q4CY19
Q3CY21
Q2CY23
Q2CY18
Q3CY18
Q4CY18
Q1CY19
Q2CY19
Q3CY19
Q1CY20
Q2CY20
Q3CY20
Q4CY20
Q1CY21
Q2CY21
Q4CY21
Q1CY22
Q2CY22
Q3CY22
Q4CY22
Q1CY23
Q3CY23
Q4CY23
Q2CY18
Q3CY20
Q4CY22
Q1CY18
Q3CY18
Q4CY18
Q1CY19
Q2CY19
Q3CY19
Q4CY19
Q1CY20
Q2CY20
Q4CY20
Q1CY21
Q2CY21
Q3CY21
Q4CY21
Q1CY22
Q2CY22
Q3CY22
Q1CY23
Q2CY23
Q3CY23
Q4CY23
Source: Bloomberg, Emkay Research Source: Bloomberg, Emkay Research
Exhibit 38: In India as well, EV penetration has remained stable at ~5-6% in 2Ws and ~2% in
PVs over the past year
E-2W penetration E-PV penetration

7.0
8.0
6.0
5.7
5.7
7.0
5.6
5.4
5.2
5.2
5.1
5.0
4.9
4.9
4.8
6.0
4.5
4.4
4.4
4.2
4.1
4.1
3.5
4.0
4.0
5.0
3.6
3.2
3.1
4.0
%
2.6
2.6
2.4
2.4
2.2
2.1
2.1
2.0
2.5
1.9
1.9
1.8
1.8
3.0
1.5
1.3
1.2
1.2
1.1
1.1
1.1
1.0
1.0
0.9
0.9
0.8
2.0
0.6
0.5
1.0
0.0
Jun-22
Jun-23
Jul-22
Sep-22
Oct-22
Jan-23
Jul-23
Sep-23
Oct-23
Jan-22
Nov-22
Dec-22
Nov-23
Dec-23
Jan-24
Mar-22
Mar-23
Feb-22
Apr-22
May-22
Feb-23
Apr-23
May-23
Feb-24
Aug-22
Aug-23
Source: Vahan, Emkay Research
March 14, 2024 |17
Ford Motor now expects electrification to be slower than expected earlier
“As the COVID shock retreated, we learned that as you scale EVs to 5,000 to 7,000
units a month and you move into the early majority customer, they are not willing to
pay a significant premium for EVs. This is a huge moment for us … It's going to take
time more than we expected 18 months ago.”
“For example, in 2023, we already started to take action. We delayed our second JV battery
plant in Kentucky. We reduced the size of our new LFP plant in Michigan, and we did not proceed
with our JV battery plant in Turkey. And now we are further adjusting installed capacity
to match demand, reassessing vertical integration in new battery chemistries,
adjusting Gen 2 products and potentially their launch timing to ensure they meet our
criteria for profitability, given the new market reality.”
“Hybrids will play an increasingly important role in our industry's transition and will
be here for the long run. Hybrid just fits specific customer use cases … And margins on
hybrids are closer to ICE, much higher than EV margins … Customers are doing the quick
showroom math on hybrids. They can quickly evaluate the breakeven between ICE and a hybrid
on the showroom floor ... and they don't have to change their behavior”
- Ford Motor in its Feb-24 earnings call (link)
General Motors to increase plug-in hybrid deployment
“It's true, the pace of EV growth has slowed, which has created some uncertainty …
Our forward plans include bringing our plug-in hybrid technology to select vehicles
in North America. Let me be clear, GM remains committed to eliminating tailpipe emissions
from our light-duty vehicles by 2035. But in the interim, deploying plug-in technology in
strategic segments will deliver some of the environmental benefits of EVs as the
nation continues to build its charging infrastructure.”
- General Motors in its Jan-24 earnings call (link)
Luxury OEMs like Mercedes see continuing relevance of ICE cars well into the next
decade
"We think plug-in hybrids will stay relevant for many years … I don't think our ICE
customers long-term would accept if that is like then, when the next gen comes, a
BEV story only. … We can produce combustion engine cars well into next decade. On
the one hand, through EU 7, China 7, and the emissions laws in the United States, primarily
California, we are updating all of our relevant ICE powertrain combinations for the 2027
timeframe.”
- Ola Kaellenius, CEO, Mercedes-Benz (link)
March 14, 2024 |18
Expanding capabilities in EVs/powertrain agnostic tech

components via M&A
 While bolstering its capabilities in core products, SPRL is also cognizant of the
electrification threat to its engine-based sales streams (derives sub-20% sales
from 2W engine parts); accordingly, the company has set up a dedicated EV arm
to i) diversify its existing products portfolio, ii) mitigate technology risk, and iii)
act as a further growth driver for the future.
 The company has acquired ~66% stake in Coimbatore-based EMFI, which is

developing EV-specific indigenous solutions like motors and controllers for a
variety of vehicular segments; separately, it is expanding into powertrain-
agnostic components via acquisition of 62% stake in Takahata Precision (can
potentially rise to 75% dependent on fulfilment of conditions), which is involved
in high-precision, injection-molding parts.
 Combined, these entities can contribute ~10% of FY26E consolidated sales.
[A] Addressing EV-specific opportunities with motors and controllers through ~66%
stake in Coimbatore-based EMFI
 SPRL is addressing the electrification threat in its portfolio (has sub-20% revenue exposure
to 2W engine products) by entering core EV products like motors and controllers. This
entry has been made via acquiring 51% stake in Coimbatore-based EMF Innovations
(EMFI) for Rs780mn (stake now further increased to 66%), which is into EV drivetrain
components like electric motors and motor controllers for a diverse range of applications
(2/3Ws, PVs, CVs including buses).
 EMFI has strong capabilities in power electronics and motors, with high levels of
localization (over 85% in motors), and presently sources all components indigenously –
except magnets, which are imported. It offers a wide range of BLDC hub motors, inner
rotor motors and controllers, along with Internal Permanent Motors (IPM), Permanent
Magnet Synchronous Motors (PMSMs) as well as Switch Reluctance Motors (SRMs). The
company has been in operations for over 5 years now and, as of acquisition (Dec-22), its
revenue stands at ~Rs170mn.
 The investment in EMFI has been undertaken through its wholly-owned subsidiary SPR
Engenious (‘SEL’); creation of a focused subsidiary signals clear intent to provide dedicated
focus/bandwidth, as well as drive further investments in this space, in our view.
SPRL’s stake in EMFI helps address the EV-specific opportunity with core products
like motors and controllers
“Our product line offers a wide variety and we also have forced cooling and glycol cooling
ranges. They have been customized for Indian conditions so that we can truly maintain the
motor at a very good operating temperature. As such, the magnets maintain a very excellent
life and the efficiency stays at the plus 94-95 level. We have a motor with the IP 67 application.
These are used underwater so that the industry can rest easy knowing that they will function
flawlessly during various seasons, including the monsoon, for various water-based solutions.”
- Comments by Krishnakumar Srinivasan, MD & CEO, SPRL (link)
Exhibit 39: EMFI’s BLDC hub motor Exhibit 40: EMFI’s BLDC inner rotor motors
March 14, 2024 |19
Exhibit 41: E-motor and motor controller products, showcased at the 2023 Auto Expo
Source: Company
[B] Expanding into powertrain-agnostic parts with Takahata
 Further, SPRL has acquired 62% stake in Japan-based Takahata Precision India, via SEL,
for high precision injection molding parts; this marks the company’s foray into powertrain-
agnostic products for SPRL. The company was acquired at an EV of Rs2.2bn and has
revenue of Rs2.1bn as of FY23.
 Takahata is a subsidiary of Takahata Japan, which was established in 2010 and is a leading
player in the automotive space with presence also in industrial products like office
equipment, optical equipment, residential facilities, medical equipment, etc. SPRL’s total
stake in Takahata can further rise to 75% by Oct-28, subject to fulfilment of certain
conditions.
Exhibit 42: Examples of Takahata’s automotive components
Source: Company
March 14, 2024 |20
Financials: We expect 13%/15%/17% CAGR in

revenue/EBITDA/PAT, respectively, over FY24E-26E
 We build-in 13% FY24E-26E revenue CAGR, on the back of: i) above-industry-growth (akin
to past outperformance) due to higher content, including exports (~19% revenue
contribution; SPRL serves clients in over 45 countries); ii) high focus on aftermarket (17%
revenue contribution; Company has over 1,200 touchpoints in India); and iii) strategic
M&As.
 Our EBITDA CAGR expectations are at 15%, with margins remaining stable around current
levels at ~21.6% by FY26E (already achieved ~20.8% in 9MFY24).
 PAT is expected to grow to Rs5.9bn by FY26E, at 17% CAGR, with EPS placed at ~Rs135.
 We build-in ~Rs2bn capex per year over FY24E-26E; given Company’s net-cash balance
sheet, cash generation is expected to remain strong, akin to the past (~Rs11.3bn
combined FCF over FY24E-26E).
 RoE is expected to remain above 20% levels, with post-tax RoCE also in healthy double-
digits.
Exhibit 43: Revenue model – We expect CAGR of 13/15/17% in revenue/EBITDA/EPS, respectively, over FY24E-26E
Rs mn FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E

Revenue 19,549 16,068 15,966 20,647 26,093 30,660 34,952 39,146
Growth YoY (%) 13.0 -17.8 -0.6 29.3 26.4 17.5 14.0 12.0
EBITDA 2,938 1,820 2,155 3,045 4,604 6,408 7,410 8,456
EBITDA margin (%) 15.0 11.3 13.5 14.7 17.6 20.9 21.2 21.6
EBIT 1,995 790 1,130 2,024 3,656 5,376 6,235 7,229
EBIT margin (%) 10.2 4.9 7.1 9.8 14.0 17.5 17.8 18.5
Interest 139 124 126 114 193 281 256 229
PBT 2,092 864 1,200 2,202 3,930 5,748 6,763 7,940
Tax rate (%) 33.8 15.5 26.0 25.7 25.2 25.2 25.2 25.2
PAT 1,385 730 887 1,636 2,943 4,303 5,059 5,939
PAT margin (%) 7.1 4.5 5.6 7.9 11.3 14.0 14.5 15.2
EPS (Rs) 30.9 16.3 19.8 37.1 66.8 97.7 114.8 134.8
Capex 1,519 2,297 501 818 1,252 2,000 2,000 2,000
% of sales 7.8 14.3 3.1 4.0 4.8 6.5 5.7 5.1
Net debt 79 (212) (1,427) (2,202) (3,812) (5,607) (8,210) (11,604)
Net D/E (x) 0.0 0.0 -0.1 -0.2 -0.2 -0.3 -0.4 -0.4
FCF (181) 1,262 1,446 1,579 2,733 2,847 3,770 4,692
Post-tax ROCE (%) 13.1 5.0 6.7 11.0 16.5 19.6 19.4 19.1
Source: Company, Emkay Research; Note: Historical EPS here is adjusted for 1:1 bonus issue in FY24
March 14, 2024 |21
Exhibit 44: We factor-in 13% revenue CAGR over FY24E-26E Exhibit 45: EBITDA to compound at 15%, with sustained margins at
around 21.6% (20.8% achieved in 9MFY24)
Revenues Revenue growth YoY
EBITDA EBITDA Margin
45,000 12 40
29 14 9,000 25.0
40,000 26 20.9 21.2 21.6
18 30 8,000
35,000 18
16.9 17.6 20.0
13 20 7,000
30,000 15.0 14.7
6,000 13.5
10
Rs mn
25,000 (1) 15.0

11.3
Rs mn
5,000
%
20,000 (18)
%
-
4,000
15,000 10.0
(10) 3,000
17,294
19,549
16,068
15,966
20,647
26,093
30,660
34,952
39,146
10,000
8,456
2,926
2,938
3,045
4,604
6,408
7,410
2,000 5.0
(20)
1,820
2,155
5,000
1,000
0 (30)
0 -
Exhibit 46: We expect profit CAGR at 17% during FY24E-26E Exhibit 47: SPRL has a net-cash balance sheet
Adj. PAT Growth YoY Net debt/Equity (x) Net Debt/EBITDA (x)
7,000 84 80 100
0.2 (0.0) 0.0 (0.0)
6,000 80 (0.1) (0.2)
0.0 (0.2)
46 (0.3)
60 -0.2 0.0 (0.4)
5,000 (0.4)
(0.1) (0.1)
22 40 -0.4
4,000 18 18
Rs mn
17 -0.6
20
%
(0)
3,000 -0.8
- (0.7)
(0.7)
-1.0 (0.8)
2,000 (0.9)
… (20) -1.2
2,943
4,303
5,059
5,939
(1.1)
1,636
1,000
1,385
1,389
(40) -1.4
887
730
(1.4)
0 (60) -1.6
Exhibit 48: SPRL to continue posting healthy cash generation; we Exhibit 49: RoE to sustain at above 20% levels; RoCE also in healthy
account for ~Rs2bn capex each year, over FY24E-26E double digits
CFO Capex FCF RoE (%) RoCE (Post-Tax-%)

6.7
8.0 30.0
5.8
7.0
4.8
25.0
4.7
6.0
4.0
3.8
5.0
20.0
3.0
2.8
2.7
4.0
Rs bn
2.2
2.0
2.0
2.0
1.9
1.7
1.7
1.7
1.6
1.6
3.0
1.4
15.0
1.3
1.2
1.0
0.7
0.6
2.0
0.5
1.0 10.0
0.0
24.2
16.3
13.9
14.3
13.1
13.6
11.0
21.2
16.5
25.3
19.6
19.4
23.4
5.0 19.1
7.0
5.0
8.0
6.7
-1.0
(0.2)
FY22
FY24E
FY25E
FY26E
FY18
FY19
FY20
FY21
FY23
0.0
March 14, 2024 |22
Risks and concerns

 Sharp uptick in electrification levels: While recent months have seen
stabilization/slowdown in the pace of EV adoption in major global markets (with EV
penetration in 2Ws in India also stagnant over most of the past year), any sharp uptick in
electrification levels would pose a risk to business (SPRL derives sub-20% revenue from
2W engine products – the segment expected to undergo the fastest transition to EVs). The
company is attempting to mitigate this risk by expanding its portfolio to EV-specific and
powertrain-agnostic components.
 High exposure to OEMs exposes Company to automotive cyclical risks: SPRL has
~64% exposure to domestic OEMs, with exports/aftermarket forming 19%/17% of sales
in FY23. High exposure to the OEM channel exposes the company to any slowdown in the
underlying automotive industry, which is cyclical in nature. Focus on exports and
aftermarkets could lead to potential incremental diversification, helping the company
cushion the impact from any downcycle in the domestic OEM space.
 Execution risk in recent M&As: The company has acquired majority stake in EMFI and
Takahata over the past year, for expanding into non-IC engine parts; while these are
positive from a strategic standpoint, appropriate and prudent execution remains a
monitorable.
March 14, 2024 |23
Annexure: Company background

Shriram Pistons and Rings (SPRL), formed in 1972, is a leading manufacturer of pistons, piston
rings, and engine components for the automotive industry. The company has a rich history
spanning over five decades. SPRL has emerged as a key player in the piston & related
components space, with ~40-45% market share in core products across segments; it serves
both, the domestic and export markets (>45 countries), with over 1,200 touchpoints in India
for aftermarket operations. SPRL has facilities in Ghaziabad (Uttar Pradesh) and Pathredi
(Rajasthan) for manufacturing pistons, piston pins, piston rings and engine valves. The
company has a facility in Coimbatore (Tamil Nadu) for manufacturing electric motors and motor
controllers; in addition to this, the company is in the process of setting up a new manufacturing
facility at Pithampur (Madhya Pradesh).
Exhibit 50: Key corporate events in history
Year Event
Incorporation of SPRL
1972
Technical Collaboration with KS Kolbenschmidt GmBH, Germany
1978 Technical Collaboration with Riken Corporation, Japan
1987 Technical Collaboration with Honda Foundry Co., Japan
1990 Technical collaboration with Fuji Oozx Inc., Japan.
1993 Engine Valves manufacturing commenced
1994 ISO 9001 from TUV Germany
1995 Steel Rings Manufacturing commenced
1999 QS 9000 from TUV Germany
2000 Crossed 2mn rings in ring production / month
2001 ISO 14001 from DNV Netherlands
2004 TPM Excellence Award from JIPM, Japan (1st in Category)
2005 Crossed 1 mn Engine valves production / month
2006 Established 3 New Piston Machining Lines
2007 TPM Special Award from JIPM, Japan (1st in Category)
Recognition given to in-house R&D Center - DISR, Govt of India
2008
Commencement of Manufacturing of IP Rings
Commencement of manufacturing of large diameter Engine Valves for Indian Railways & offroad vehicles.
2009
Crossed 2 million Engine Valve production per month
Becomes the largest producer of Piston Rings in India.
2010
Commenced manufacturing of Composite Plating of Chrome (CPC) Rings.
2011 Establishment of 2nd Plant at Pathredi, Rajasthan
2014 New Technology Centre inaugurated
2015 Commenced supply to JLR
2018 Acquisition of Shriram Automotive Products Ltd
2020 Establishment of 3rd Plant for global Surface Treatment facility at Ghaziabad, UP
2021 SPR leads the development of Piston Assembly for BS6 models in India
2022 Company crosses Rs20bn turnover mark
Source: Company
Exhibit 51: SPRL – Examples of pistons… Exhibit 52: …(contd.) Examples of pistons
March 14, 2024 |24
Exhibit 53: SPRL – Capabilities in engine valves
Source: Company
Exhibit 54: SPRL – Manufacturing and sales locations
Source: Company
March 14, 2024 |25
Shriram Pistons & Rings : Consolidated Financials and Valuations
Profit & Loss Balance Sheet

Y/E Mar (Rs mn) FY22 FY23 FY24E FY25E FY26E Y/E Mar (Rs mn) FY22 FY23 FY24E FY25E FY26E
Revenue 20,647 26,093 30,660 34,952 39,146 Share capital 220 220 441 441 441
Revenue growth (%) 29.3 26.4 17.5 14.0 12.0 Reserves & Surplus 12,330 15,054 18,363 22,511 27,381
EBITDA 3,045 4,604 6,408 7,410 8,456 Net worth 12,550 15,275 18,803 22,951 27,821
EBITDA growth (%) 41.3 51.2 39.2 15.6 14.1 Minority interests 0 141 141 141 141
Depreciation & Amortization 1,021 947 1,032 1,175 1,227 Deferred tax liability (net) 220 199 199 199 199
EBIT 2,024 3,656 5,376 6,235 7,229 Total debt 1,568 3,332 3,079 2,812 2,539
EBIT growth (%) 79.2 80.7 47.0 16.0 15.9 Total liabilities & equity 14,338 18,945 22,221 26,102 30,700
Other operating income 0 0 0 0 0 Net tangible fixed assets 4,875 4,461 5,401 6,226 6,999
Other income 292 467 653 784 941 Net intangible assets 1,127 1,899 1,899 1,899 1,899
Financial expense 114 193 281 256 229 Net ROU assets 889 972 972 972 972
PBT 2,202 3,930 5,748 6,763 7,940 Capital WIP 56 47 75 75 75
Extraordinary items 14 45 0 0 0 Goodwill 0 0 0 0 0
Taxes 566 991 1,448 1,704 2,001 Investments [JV/Associates] 48 48 48 48 48
Minority interest 0 (4) (3) 0 0 Cash & equivalents 3,770 7,144 8,686 11,022 14,143
Income from JV/Associates 0 0 0 0 0 Current assets (ex-cash) 7,738 9,158 10,761 12,268 13,740
Reported PAT 1,621 2,898 4,303 5,059 5,939 Current Liab. & Prov. 4,163 4,783 5,620 6,407 7,176
PAT growth (%) 84.3 78.8 48.5 17.6 17.4 NWC (ex-cash) 3,575 4,375 5,141 5,861 6,564
Adjusted PAT 1,636 2,943 4,303 5,059 5,939 Total assets 14,338 18,945 22,221 26,102 30,700
Diluted EPS (Rs) 37.1 66.8 97.7 114.8 134.8 Net debt (2,202) (3,812) (5,607) (8,210) (11,604)
Diluted EPS growth (%) 87.2 78.8 48.5 17.6 17.4 Capital employed 14,338 18,945 22,221 26,102 30,700
DPS (Rs) 5.0 7.5 17.6 20.7 24.3 Invested capital 10,465 11,707 13,413 14,958 16,434
Dividend payout (%) 13.6 11.4 18.0 18.0 18.0 BVPS (Rs) 284.9 346.8 426.9 521.0 631.6
EBITDA margin (%) 14.7 17.6 20.9 21.2 21.6 Net Debt/Equity (x) (0.2) (0.2) (0.3) (0.4) (0.4)
EBIT margin (%) 9.8 14.0 17.5 17.8 18.5 Net Debt/EBITDA (x) (0.7) (0.8) (0.9) (1.1) (1.4)
Effective tax rate (%) 25.7 25.2 25.2 25.2 25.2 Interest coverage (x) 0.0 0.0 0.0 0.0 0.0
NOPLAT (pre-IndAS) 1,503 2,734 4,021 4,664 5,407 RoCE (%) 11.0 16.5 19.6 19.4 19.1
Shares outstanding (mn) 44.1 44.1 44.1 44.1 44.1 Source: Company, Emkay Research
Cash flows Valuations and key Ratios

Y/E Mar (Rs mn) FY22 FY23 FY24E FY25E FY26E Y/E Mar FY22 FY23 FY24E FY25E FY26E
PBT 2,202 3,930 5,748 6,763 7,940 P/E (x) 38.9 21.6 14.8 12.6 10.7
Others (non-cash items) 1,531 1,839 1,313 1,430 1,456 P/CE(x) 23.9 16.4 11.9 10.2 8.9
Taxes paid (573) (1,039) (1,448) (1,704) (2,001) P/B (x) 5.1 4.2 3.4 2.8 2.3
Change in NWC (400) 213 (766) (720) (703) EV/Sales (x) 3.0 2.3 1.9 1.6 1.3
Operating cash flow 2,193 3,952 4,847 5,770 6,692 EV/EBITDA (x) 20.2 13.0 9.1 7.5 6.2
Capital expenditure (615) (1,219) (2,000) (2,000) (2,000) EV/EBIT(x) 30.3 16.4 10.8 8.9 7.2
Acquisition of business (44) (1,063) 0 0 0 EV/IC (x) 5.9 5.1 4.3 3.7 3.2
Interest & dividend income 95 197 0 0 0 FCFF yield (%) 2.6 4.6 4.9 6.8 9.0
Investing cash flow (563) (2,085) (2,000) (2,000) (2,000) FCFE yield (%) 2.5 4.3 4.0 5.5 7.0
Equity raised/(repaid) 0 0 0 0 0 Dividend yield (%) 0.3 0.5 1.2 1.4 1.7
Debt raised/(repaid) (662) 1,032 (252) (267) (273) DuPont-RoE split

Payment of lease liabilities (76) (82) 0 0 0 Net profit margin (%) 7.9 11.3 14.0 14.5 15.2
Interest paid (113) (191) (281) (256) (229) Total asset turnover (x) 1.5 1.6 1.5 1.4 1.4
Dividend paid (incl tax) (132) (308) (774) (911) (1,069) Assets/Equity (x) 1.1 1.2 1.2 1.2 1.1
Others 227 573 3 0 0 RoE (%) 13.6 21.2 25.3 24.2 23.4
Financing cash flow (680) 1,105 (1,305) (1,433) (1,571) DuPont-RoIC
Net chg in Cash 950 2,971 1,542 2,336 3,121 NOPLAT margin (%) 7.3 10.5 13.1 13.3 13.8
OCF 2,193 3,952 4,847 5,770 6,692 IC turnover (x) 2.0 2.4 2.4 2.5 2.5
Adj. OCF (w/o NWC chg.) 2,593 3,739 5,613 6,489 7,395 RoIC (%) 14.5 24.7 32.0 32.9 34.4
FCFF 1,579 2,733 2,847 3,770 4,692 Operating metrics
FCFE 1,560 2,736 2,566 3,514 4,463 Core NWC days 63.2 61.2 61.2 61.2 61.2
OCF/EBITDA (%) 72.0 85.8 75.6 77.9 79.1 Total NWC days 63.2 61.2 61.2 61.2 61.2
FCFE/PAT (%) 96.2 94.4 59.6 69.5 75.1 Fixed asset turnover 1.6 1.9 2.0 2.0 2.0
FCFF/NOPLAT (%) 105.0 99.9 70.8 80.8 86.8 Opex-to-revenue (%) 47.1 40.3 39.8 39.5 39.1
March 14, 2024 |26
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Shriram Pistons Initiating Coverage - 140324 - Others-054537

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BUY Shriram Pistons & Rings

Dominant & growing franchise at attractive valuations

Revenue 20,647 26,093 30,660 34,952 39,146 ADTV-3M (mn shares) -

OEMs Aftermarket Exports

Source: Company, Emkay Research Source: Company, Emkay Research

MSIL - Fuel-wise mix expectation in 2030 FY13-23 FY18-23

ICE HEV BEV 12% 10%

Source: Company presentation Source: SIAM, Company, Emkay Research

Company Comment Reference

Caterpillar Caterpillar investing USD725mn in new large engine plant Link

Source: Company, Emkay Research

Company Comment Reference

Source: Company, Emkay Research

Revenues Revenue growth YoY EBITDA EBITDA Margin

Source: Company, Emkay Research Source: SIAM, Company, Emkay Research

Source: Company, Emkay Research Source: Company, Emkay Research

RoE (%) RoCE (Post-Tax-%)

Source: Company, Emkay Research Source: Company, Emkay Research

Exhibit 13: SPRL is trading at ~12.5x PER on one-year forward basis

1-year forward P/E (x) 5-year average P/E +1 STD -1 STD

Source: Bloomberg, Emkay Research

Initiate coverage with BUY, 70% upside .......................................................... 5

Enhancing dominant positioning in core products as well as CPV ........................ 8

Expanding capabilities in EVs/powertrain agnostic tech components via M&A ..... 19

Financials: Expect 13/15/17% CAGR in revenue/EBITDA/PAT in FY24E-26E ....... 21

Key risks and concerns ............................................................................... 23

Annexure – Company background ................................................................ 24

We initiate coverage on Shriram Pistons with a BUY

Rs mn FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E

Shriram Pistons (SPRL) Craftsman Automation Sansera Engineering

Share of powertrain parts in

Exhibit 16: SPRL is trading at ~12.5x PER on one-year forward basis

1-year forward P/E (x) 5-year average P/E +1 STD -1 STD

Source: Bloomberg, Emkay Research

Exhibit 17: Valuation comparison – SPRL vs other auto companies

ROE (%) P/E (x) EV/EBITDA (x) EPS Growth (%)

Source: Bloomberg, Emkay Research; Note: *denotes Bloomberg consensus

Enhancing dominant positioning in core products as well

SPRL - Market share (%)

Source: Company, Emkay Research

OEMs Aftermarket Exports

Source: SIAM, Company, Emkay Research

Source: Company, Capitaline, Emkay Research

Source: Company, Capitaline, Emkay Research

Source: Company, Capitaline, Emkay Research

Source: Company, Capitaline, Emkay Research

[B] Strong technological partnerships, improving in-house R&D and varied

Name Country Year Area of collaboration Partner Locations

Source: Company, Emkay Research

Source: Company, Emkay Research

- Comment by Shailesh Chandra, MD, TTMT Passenger Vehicles, in Oct-23 (link)

TTMT - Fuel-wise mix expectation in 2030

Other ICE incl. flex fuels CNG BEV

BJAUT to introduce the world’s first CNG motorcycle by next quarter

- Comment by Rajiv Bajaj, MD, BJAUT, in Mar-24 (link)

- Comments by Krishnakumar Srinivasan, MD & CEO, SPRL (link and link)

Source: Company Source: Company

Exhibit 30: Pistons for marine LNG engine application

‘Last man standing’ opportunity in ICE, engine upgrades

 Moderation in the pace of EV adoption has been observed in recent times in

 This is further accentuated by India’s inherent cost-competitiveness/frugal engineering

Company Comment Reference