Recommendation from Auto Ancillary Sector

This column gives you scrip chosen by the research team during the fortnight that is fundamentally strong and expected to give good capital appreciation over a time period of 1 year. 

NDR Auto Components Ltd : SEATING THE FUTURE IN MOTION

HERE IS WHY
✓  Expanding presence with top OEMs
✓  Strong order book with ₹3,000 crore target
✓  Multi-pronged growth: JV + organic

I ndia has become the fastest growing major economy in the world in recent years, which has led to significant demand for automobiles, including auto components. India's automotive seat market size reached USD 3.6 billion in 2024. Looking forward, IMARC Group expects the market to reach USD 5.4 billion by 2033, exhibiting a growth rate (CAGR) of 4.18 per cent during 2025-2033.

Considering this, we recommend NDR Auto Components for our choice scrip recommendation for this issue of the magazine. NDR Auto is primarily engaged in the manufacturing, fabricating, and assembling of every kind of automotive component, including seats, spare parts, and components for the seats. NDR Auto also has a joint venture with Maruti Suzuki in Bharat Seats Ltd, where NDR Auto holds a 28.66 per cent equity stake.

In Q4FY25, on a consolidated basis, the revenue of the company increased by 9.08 per cent YoY to ₹192.04 crore compared to ₹176.05 crore from the previous year’s same quarter. Net profit stood at ₹12.89 crore compared to ₹9.57 crore, a YoY increase of 34.62 per cent, while sequentially it increased by 14.06 per cent from ₹11.30 crore.

For FY25, the revenue breakup stood at approximately 40 per cent from the sale of trims and 60 per cent from the sale of frames. In seat production, frames provide the structural support, while trims refer to the covering and aesthetic elements. In Q4FY25, the company entered a 50:50 JV with Hayashi Telempu, a leader in automotive interior solutions. The initial focus is on Ambient Lighting. The JV has secured its first order from Toyota for Ambient Lighting. Sales of seating solutions to KIA commenced in January 2025. Sunshade Products sales started in Q3FY25 to Toyota Hyryder models.

Management estimates the total kit value per car for the JV’s addressable products is ₹20,000-25,000, which is a significant jump over current content per vehicle seating solutions at ₹10,000-15,000. The company’s current organic order book stands at approximately ₹1,100–1,200 crore, with a strategic target to reach ₹2,000 crore organically. An additional ₹1,000 crore is expected to be added through partnerships, taking the total targeted order book to ₹3,000 crore by FY30 as part of its five-year growth plan. To support this growth, the company has acquired 10 acres of land in Kharkhoda to cater to future expansion plans of Maruti Suzuki, with a clear intention to double its production capacity over the coming years in line with its revenue targets. An additional 26 acres have been acquired in Aurangabad for future Toyota business.

The company has additional joint ventures with Toyota Boshoku Relan India Pvt. Ltd. and Toyo Sharda India Pvt. Ltd., strengthening its presence in the automotive components space. It aims to scale its revenue to ₹3,000 crore by FY2030, a significant jump from ₹717 crore in FY25. Of this, ₹2,000 crore is expected to be driven by organic growth across key segments such as seating systems, seat inserts, and body-in-white (BIW) components. The remaining ₹1,000 crore is projected to come from joint ventures, mergers & acquisitions, new product developments, and the addition of new customers, reflecting the company’s multi-pronged growth strategy.

On the valuation front, the shares of the company are trading at a PE of 48.5x; however, the PEG ratio is below one. The company has a three-year ROE of 16.8 per cent and ROCE of 16.8 per cent. The company's three-year sales growth and profit growth stand at 45.3 per cent and 51.1 per cent, respectively. NDR Auto is well-positioned to capitalise on the seating market; hence, we recommend a BUY.