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Microcap company set to gain big from increasing sales of Automobiles.

Samkrg Pistons and rings is a 35 years old almost debt free company engaged in manufacturing engine components for the automotive industry. Company manufactures wide range of products including pistons, piston rings, and cylinder liners, for both original equipment manufacturers (OEMs) and the aftermarket.

Samkarg Pistons

Current Market Price of the date of publishing this report-: 153 Rs

Incorporated in 1988, company having its headquarters in Bangalore, has a strong presence in the Indian market as well as a developing international client base, with shipments to over 50 countries worldwide. The company operates a cutting-edge manufacturing facility that comprises a foundry, machining, and assembly processes, allowing for full in-house production.

Samkrg Pistons & Rings Limited is an Indian producer of automobile engine components. The firm manufactures a wide range of items for both OEMs and the aftermarket, including pistons, piston rings, and cylinder liners.

SAMKRG operates four significant and highly specialised factories in various places. Two facilities at Bonthapally, 90 kilometres from Hyderabad Airport, specialise in the manufacturing of Pistons & Pins and steel rings, respectively. Two further facilities, Varisam and Akkivalasa, are located near the port city of Visakhapatnam and specialise in the manufacturing of Piston Rings and Pistons & Pins, respectively.

The company’s emphasis on technology, efficiency, and customer satisfaction positions it well for future development and success. The company has developed in strong markets while maintaining profitability during economic downturns, allowing its business segments to become greater leaders in their respective specialty industries.

Compliance with TS: 16949, ISO 9001 Quality systems, ISO14001, and OHSAS 18001 has improved safety standards as it seeks new and better methods to improve internal operations. The emphasis of the company is on the optimization of existing resources, i.e. utilising the TOTAL person rather than simply the abilities required to fulfil the present objective.

The company expected to satisfy BS VI emission requirements in piston and rings for 2 & 3 & 4 wheelers and has taken all necessary preparations to comply by 2020, far before the GOI’s deadline of 2021.

Samkrg Pistons & Rings Ltd is a well-known participant in the Indian automotive components sector, with a solid reputation for quality and innovation.

Business Products

Piston

SAMKRG PISTONS AND RINGS is a leading manufacturer and supplier of Pistons, Piston Pins, and Piston Rings for Gasoline and Diesel I.C Engines used in Scooters, Motorcycles, Cars, Tractors, Light Commercial Vehicles, Stationary Engines, and other special applications with diameters ranging from 35 mm to 130 mm.

Tin coating, Molly coating, Graphite coating, Hard Anodizing, and chrome plating are applied to pistons to increase performance as requested by the client.

Piston Rings

The Axial thickness (also known as the width) and the size of the gap when the ring is closed to its working diameter are the two key parameters required in rings.

To meet the needs of the automotive markets, SAMKRG manufactures Cast Iron, IKA, Tuff ‘B’ Alloy, and Nodular (Ductile) rings. This ring is used in motorcycles, cars, LCVs, HCVs, tractors, and industrial engines.

Pins

Piston pin connects piston and connecting rod. It is similar to a simple cylindrical shaft and can be solid or hollow. The piston pin is held by circlips and is made up of special hardened steel

R&D

SAMKRG, stresses upon its design facilities as it directly impacts how the work is done and the machinery is integrated in such a way that it creates a single, well-functioning system.

The company’s design facilities are keeping up with changing times as engines get more advanced, which directly contributes to the complexity of current pistons. SAMKRG’s design facilities meet the demand for new, high-output engines. Innovative technology enables the company to create contemporary pistons and piston rings. By being flexible with numbers, the company is able to retain the desired and anticipated quality of its products.

The company’s facilities are intended to be quickly extended or altered to meet changing production requirements.

The company R&D expenditure stood at Rs.35.20 Lakhs during the year to catch up with up-gradation of technology and to meet OEM’s ever demanding quality and new developments requirement to improve life cycle of their product meeting BS-VI norms of environmental standards for Auto components.

Capacity

Currently, company has plans to increase its capacity to match the demands in future. Company’s manufacturing capacity always coincides with the increase in the volume of its esteemed customers.

Clientel

SAMKRG exports to over 24 countries throughout the world. It is India’s leading manufacturer, supplier, and exporter of pistons and piston rings, with a global reach. The company frequently ships to nations such as Russia, South Korea, Japan, Brazil, Colombia, Germany, France, Poland, Italy, the United Kingdom, Peru, Australia, and many more.

Financials

For the year ended March 22

  • Company posted the gross turnover of Rs.28919.82 lakhs during year 2021-22 as against Rs.27567.96 Lakhs up 5% as compared to the previous year 2020-21 and Net turnover of Rs.23677.12 Lakhs during the year 2021-22 as compared to Rs.22484.46 Lakhs for the previous year 2020-21.
  • Earnings Before Depreciation, Interest and Tax (PBDIT) stood at Rs.3419.77 lakhs as against previous year of Rs.3794.51Lakhs down 10% on account of increase in material prices.
  • The Profit Before Tax was at Rs.1921.48 lakhs as compared to Rs. 2333.25 lakhs in 2020-21 down 17% as compared to the previous year.

For Q2FY23

  • Net Sales stood at Rs 67.90 crore in September 2022 down 5.23% from Rs. 71.64 crore in September 2021.
  • Quarterly Net Profit stood at Rs. 5.42 crore in September 2022 down 21.99% from Rs. 6.95 crore in September 2021.
  • EBITDA stood at Rs. 10.14 crore in September 2022 down 17.43% from Rs. 12.28 crore in September 2021.

Sectorial Outlook

The expansion of the company is tied to the growth of the car sector and the broader growth of the rural economy. During the year 2021-22, the Indian auto component industry is rising as a prospective global automotive supplier with extremely excellent export potential to developing countries, but the domestic auto component industry has slowed due to the second and third waves of Covid’19. As we can see, the Indian auto component industry is returning to pre-crisis levels, with demand for some items exceeding pre-crisis levels.

Now, the government is fully extending great support for hybrid electric vehicles during the years 2021-2022, while also introducing stringent norms by introducing BS VI standards and safety norms during the years 2021-2022 below 150cc IC engine 3-wheeler vehicles and motorcycles, with completion by 2025 due to the slowdown effect in the Automobile Parts Industry, particularly 2 and 3 wheelers during these years.

The Company has very good opportunities because of long term business relationship with valued customers both in Domestic OEM’s and agricultural tractors and Replacement Market & Exports.

Conclusion

Samkrg Pistons & Rings Limited is an Indian producer of automobile engine components. It manufactures a wide range of items for both OEMs and the aftermarket, including pistons, piston rings, and cylinder liners. In terms of financial performance, Samkrg has seen steady growth in recent years. The company has reported consistent increases in revenue, with a strong focus on cost control and operational efficiency. In addition, Samkrg has made investments in research and development to ensure its products remain at the forefront of industry advancements. Going forward we expect the company to reap benefits of its sustained focus on building strong products to cater various automobile industry segments. With the increasing demand of 2-3 wheeler automobiles company is set to gain big as it supplies a lot of auto components used in those products. Samkarg being a microcap company with market cap of just 150 crores is worth exploring.

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