PIX Transmissions Ltd. is the leading manufacturer of Belts and related mechanical Power Transmission products in India. The Company features state-of-the-art Belt manufacturing units as well as an ultra-sophisticated, automated Rubber Mixing facility.

Pix Transmission Ltd

 Current Market price on the date of publishing this report-: 860 Rs

Introduction

Incorporated in the year 1981 Pix Transmissions Limited is the  fastest emerging Global Leader in Mechanical Power & Fluid Transmission Business. The Company is engaged into the manufacturing of industrial and automotive belts, agricultural belts, hoses, hose assemblies and end fittings. The company is is an ISO/TS 16949:2002, ISO 14001 & OHSAS 18001 certified company.

The company exports its products to over 100 countries mainly exporting to European countries and the US.

PIX is the only Indian company to manufacture Hoses and Fittings in-house, and can cater to its customers by providing a complete fluid power transfer solution, in terms of Hose Assemblies of various types and sizes.

The firm has received ATEX accreditation from Germany, indicating that its belts exceed the necessary Health and Safety standards for its whole range of fire-resistant antistatic belts. Hoses have received notable approvals from MSHA, GL, DGMS, USCG, DNV, and Lloyd’s Register.

It is the only Indian firm that has received the special award for Outstanding Export Performance from the Export Promotion Council of India on a regular basis over the previous many years. PIX has also received the coveted Niryat Shree award for attaining great success in product export.

The firm is also the first Indian corporation to form joint-venture companies in the United Kingdom, Germany, Northern Ireland, the United Arab Emirates, and China, allowing it to better service its clients and advertise its products around the world. PIX has the most extensive international network of Channel Partners. With a distribution network in 45 countries and products shipped to over 75 countries worldwide, it has a competitive advantage in terms of reach and market penetration.

Company has following different subsidiaries such as

• PIX Germany GmbH, Germany – : PIX Germany GmbH, Germany is subsidiary of PIX Transmissions Europe Limited incorporated to carry on business of PIX Products and other products in the market of European Countries. 
• PIX Middle East FZC incorporated to carry on business of PIX Products in the market of Middle East Countries. 
• PIX Transmissions Europe Limited incorporated to carry on business of PIX Products and other products in the market of European countries. 
• PIX Middle East Trading LLC, UAE is subsidiary of PIX Middle East FZC established to carry on business of PIX Products in the market of Middle East Countries. 

Business Products

Wrap belts, cut edge belts, ribbed/poly v-belts, synchronous/timing belts, and application specific construction belts such as double cogg, double poly, poly + timing, honey comb, PT-0, PT-6, PT-7, 2TP belts, variable speed belts, elasticated belts, banded belts, kevlar cord belts, antistatic oil and heat resistant belts, and dry cover belts are manufactured by the company. It offers medium and high pressure wire braided hydraulic hoses, spiral hoses, industrial hoses, thermoplastic hoses, hose assemblies, and end fittings in its hose line. Hoses and fittings are manufactured in-house by the company. Nagpur, India, is where the company’s production plant is located.

Company in principal manufactures following products such as 

• Timing / Synchronous Belts 
• Ribbed / Poly-V Belts 
• Banded Belts 
• Rubber Belts 
• Automotive Belts 
• Industrial Belts 
• Agricultural Belts 
• Lawn and Garden Belts 

Products manufactured by the company has following applications

Other than the direct products company also manufactures and sells various accessories associated with its products such as 

• PIX-Service Kit 
• PIX-Digital Tension Meter
• PIX-Belt Tension Tester 
• PIX-Belt Length Measurer 
• PIX Belt Profile Gauge 
• PIX-Pulley Gauges 
• Poly-V Belts Wear Gauge 
• PIX – Timing Belt Gauges 
• PIX Pulley Gauge for Banded V-Belt drives 
• PIX-X’Align® Laser-guided Pulley Alignment Tool 
• PIX-X’slit Belt Cutting Machine

Financials

For the quarter ended March 2022, 

• Consolidated sales were up 3% to Rs 124.77 crore.
• Operating profit margin of the company stood at was 22.5% for the current quarter.
• Operating profit was down 21% at Rs 28.05 crore. 
• PBT for the quarter was down 21% to Rs 23.45 crore. 
• Net profit for the company was down 29% at Rs 15.47 crore.

For the year ended March 2022

• The company’s net sales climbed 18% to Rs 449.26 million.
• Operating profit margin grew from 29.1% to 25.4%, resulting in a 3% rise in operating profit to Rs 114.17 crore.
• Other income increased by 64% to Rs 8.17 crore.
• PBT increased by 8% to Rs 94.58 crore.
• The net profit for the year increased by 6% to Rs 68.84 crore.
• Company registered Compounded Net profit cagr of 34% over 3 and 5 year period. 

Capex

The firm is improving its technologies and expanding its capacity. The firm is implementing this transition in stages to avoid affecting general operations. In FY21, the firm replaced ageing gear with newer technology at a cost of roughly Rs 25 crore. For FY22, the firm plans to invest around Rs.60 crore in capital expenditure to streamline operations, increase capacity to satisfy market demand, and introduce new goods. PTL is nearing the end of its capital expenditures. According to management, the full project should be finished by Q1FY23.

The first phase of its belt capacity expansion has begun at its Nagpur site. The capacity expansion would not only assist satisfy the expanding worldwide demand for Pix Belts, but would also result in increased efficiency and the use of innovative manufacturing technologies to help the firm reach its long-term development goals. The business is increasing its belt production capacity at the MIDC plant by 50% to 270 million belts and 4.12 lakh sleeves per year. Furthermore, capacity at the rubber mixing facility will be boosted by de-bottlenecking. The logistics centre has been fully operating since the beginning of FY 2022-23, and it is already reaping some of its benefits in terms of reduced administrative overhead and resource duplication.

Managements Comments

In order to meet the growing global demand for the pix belts management has expressed their intent of increasing capacity and concentrating more on the value added products to achieve better sales in the coming period. 

Additionally management aspires to grow revenues of pix transmissions by 2 times in the coming three years period. However this is based on the information on the internet and we were not able to verify the exact statement given by the management.

Sectorial Outlook

The agriculture business in India is now labor-intensive, but it is rapidly transitioning to more mechanised instruments, which will likely increase demand for the company’s transmission goods.

The government has also announced big infrastructural plans and incentives for corporations to establish production in India, which would eventually lead to new and replacement market demand for the company’s products. Belts are also in great demand since they must be changed on a regular basis.

Conclusion 

PIX Transmissions, one of the leading manufacturer of belts and related mechanical power transmission products in India with 250 committed Channel Partners in over 100 countries worldwide has total borrowing of 118 crs as of march 2022 against which company has cash and equivalents of about 30 crs with debt to equity ratio of 0.32 which seems to be quite comfortable. Additionally company has been planning expansion on account of increased demand for its products and moreover with increasing focus of the government on the big infrastructural plans it will add more to the various products manufactured by the company which are mainly used in manufacturing industries. Thus strong demand for the product and managements intent to increase the revenue in the coming period makes it worth exploring for long term. The concern we found with this company is high inventory holding of about 125 crores for which we were not able to find a justifiable reason. In case we find something will share with you.

However the stock is up over 10 times in just 3 years which could pose a risk to the stock going ahead, as normally whenever there is such run up in the price we have observed that over the period it take time while the stock continues it upward trajectory. Therefore it may take more then usual time to continue its journey ahead. As a result with long stretched time frames should only explore this company and please do not put any queries relating to stock price movements.