CIE AUTOMOTIVE INDIA LIMITED
The company was jointly promoted by CIE group of Spain and Mahindra & Mahindra group, India, in 1999 and earlier it was known as Mahindra CIE Automotive Limited. In May, 2023 Mahindra exited the entire holdings in the company and changed its name to CIE Automotive India Ltd. As of September, 2023, CIE Automotive group of Spain holdings 65.7% stake in the company.
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Know the Company
CIE Automotive India Ltd, part of the CIE Automotive Group of Spain is an automotive components company with manufacturing facilities in India and in European countries including Germany, Spain, Lithuania and Italy, as well as a plant in Mexico, North America.
CIE India has 29 manufacturing facilities including 4 manufacturing facilities in Europe and one in Mexico. The Company is catering auto segments including cars, utility vehicles, commercial vehicles, two wheelers and tractors. Company caters to two key geographies, namely India and Europe. The manufacturing locations of the company are mostly situated close to major automotive manufacturing hubs to facilitate comfortable supplies to customers. The Company’s 52% of consolidated revenue comes from India and the remaining 48% comes from overseas.
Company’s Products
CIE India manufactures and suppliers several critical components for Automobiles includes crankshafts forged steel parts for industrial vehicles, aluminum castings, sheet metal stampings, castings, magnetic products and gears. In addition to these, it also makes oil sumps, turbo housings, exhaust manifolds, differential and carrier housing, electrical units, transmission driveline, suspension products, brake calipers, axle support products, etc.
Company offers its products for use in cars, utility vehicles, commercial vehicles, tractors, off-road vehicles and two-wheelers.
Subsidiaries
CIE India has fourteen subsidiaries namely Stokes Group Limited (U.K.), CIE Galfor S.A.U. (Spain), CIE Legazpi S.A. (Spain), UAB CIE LT Forge (Lithuania), CIE Forging Germany GmbH (Germany), Jeco Jellinghaus GmbH (Germany), Gesenkschmiede Schneider GmbH (Germany), Falkenroth Unformtechnik GmbH (Germany), Schoneweiss & Co. GmbH (Germany), Metalcastello S.p.A. (Italy), BF Precision Private Limited (India), Bill Forge de Mexico S. A. de. CV (Mexico), Aurangabad Electricals Limited (India) and CIE Hosur Limited (India).
Associate Companies
CIE India has Six Associates as on 31st December, 2022 namely Clean Max Deneb Power LLP (Deneb), Sunbarn Renewables Private Limited (Sunbarn), Renew Surya Alok Private Limited (Renew), Gescrap India Private Limited (Gescrap), Strongsun Solar Private Limited (Strongsun) and Galfor Eolica SL.
Strengths
CIE India is part of the auto component giant CIE Automotive Group of Spain and the parent’s partner for its forgings business globally. Therefore, Indian unit enjoys from the vast experience of its parent, CIE group and co-developing products for the quickly changing automotive industry.
CIE India has strong presence in each of the segment it engaged and its manufacturing facilities are strategically located adjacent to its OEM customers and their Tier 1 suppliers. Company manufactures very complex, critical and value added components, which separating it from other ‘tier 2 parts’ manufacturers.
Automobile sector across the globe and categories are changing from fossil fuels to EVs and other cleaner energy segments rapidly. Electric powered engines has seen rapid adoption in Europe, which accounts over 10% market share presently and this trend also picking up in India too, especially in two and three wheelers segments. With the long-lasting relationship with large OEMs customers as well as a track-record of manufacturing superior quality products helps the company to a strong edge in the EV space too. The company’s EV order for supply extends Aluminum & steel forgings, gears, stampings & composites parts for e2W, e3W and e4W. In the last FY, nearly 40% of the order book of the company in Europe and 35% of the order book in India were for EVs.
Future plans & Outlook
Going forward, demand situation in the Indian automotive market expected to do well. In Europe the company targets to change its product portfolio and processes in line with the challenges of rising input costs in a stagnating market as well as a rapid conversion to Electric Vehicles (EVs). Company already won a large order book for EV parts and is working with major European & Indian OEMs in the EV space, across segments. To meet higher demand, company has been investing in additional capacities to cater to the EV order book which includes a new unit at the gears plant in Pune, a new forging & machining line by Bill Forge at Bengaluru to manufacture EV transmission parts, the new aluminum plant at Aurangabad as well as the investments in robotic welding and stampings facilities there also cater to EVs demands.
As per the management comments, the share of Battery powered electric vehicles (BEVs) in the overall light vehicles market is projected to grow to 15% by 2025 and to 60% by 2030 though the company realizes that making forecasts about an emerging technology rapidly penetrating the market, is fraught with risks. CIE India usually spending almost 6% of annual sales as Capex, which includes maintenance and capacity additions. However, in the next two years, company plans to spend more on Capex for all verticals to meet higher demand. Company also follows a judicious mix of organic and inorganic growth. It plans mergers & acquisitions to fill strategic gaps in its products, customers and skills.
Company’s major part of the European revenue comes from the sales of forgings vertical, especially from manufacturing crankshafts for cars. Crankshafts are at risk due to the transition to EVs. But it does not expect that there will be a large negative effect in the short term but in the midterm, company expect crankshaft sales to decline progressively. To mitigate this risk, Company plans to start producing aluminum forged parts and steel suspension products for cars.
Almost 40% of the new orders that the car forgings vertical acquired in CY22 were in the BEV space. Company expects, forged aluminum parts will contribute a significant part of car forgings sale by 2027. Its other European vertical which makes gears for off road and farm vehicles, will not be much affected by electrification. In CY22, almost 35% of the order book generated was in the EV space.
Financials
CIE India’s financial results for the FY2022 (company following financial year of January-Dec) ended December2022 showed mixed trend. Revenue for the period jumped nearly 30% to Rs 8753 crore. At the same period net loss reported at Rs 136 crore as against a net profit of Rs 393 crore, mainly on account of a one-time write-off of Rs 749 crore. This one-time expense mostly recognized as a fair value loss adjustment from its discontinued European operations.
For the Q3Fy23, ended September2023, company’s Net profit zooms 119% to Rs 375 crore with a marginal increase in revenue, which stood at Rs 2,279 crore as against the corresponding quarter last year revenue of Rs 2233 crore. At the operating level, EBITDA jumped 17.7% to Rs 345 crore in the third quarter of this fiscal over Rs 293 crore in the corresponding period in the previous fiscal. The EBITDA margin stood at 15.2% in the reporting quarter as compared to 13.2% in the corresponding period in the previous fiscal.
Key Risks
Auto sales largely depend on the economic growth of the country. There are some worries about lower-than-estimated GDP growth especially in European countries, due to various reasons like elevated inflation and interest rates as well as Geo-political issues are major risk factor of the company.
CIE India’s almost 22% revenue comes from 2W segment, and Bajaj Auto is the main customer of it in this segment. This sectoral and company specific concentration is also a cause of concern.
Sector: Automobile and Auto Components
Market Price: Rs. 476.50 as on today
FV: ₹10/-
Stock Name: CIE Automotive India Ltd
BSE Code: 532756, NSE Code: CIEINDIA
Market Cap.: ₹18700 Crore
Book Value: ₹134
Segment: Auto Components & Equipments
Incorporation: 1999
Headquarters: Mumbai
Employee Strength: 4,258 (2022)
