SUBROS LIMITED
Subros Ltd (Subros) is a leading Indian automotive air conditioning solutions provider, specializing in heating, ventilation, air conditioning, and refrigeration systems. The company was founded in 1985 as a joint venture between the Suri family of India and Denso Corporation & Suzuki Motor Corporation, Japan. Subros has a technological agreement with Denso Corporation, Japan, a leading automotive manufacturer in the global market. Denso Corporation currently owns a 20% share in the company. Suzuki Motor Corporation, Japan, holds an 11.96% share, and the promoter, the Suri family, holds a 36.79% equity stake.
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Subros manufactures a wide range of heating, ventilation, air conditioning, and refrigeration systems for various type of vehicles, including passenger cars, commercial vehicles, as well as railways. The company has strong partnerships with global and Indian automotive giants, including Maruti Suzuki India Ltd, Tata Motors, Mahindra & Mahindra, Denso, Diamler, Force, Nissan, Toyota Kirloskar Motors, and many others.
The company’s manufacturing facilities are located in Noida (Uttar Pradesh), Manesar (Haryana), Pune (Maharashtra), Chennai (Tamil Nadu) and Karsanpura (Gujarat). It also has a manufacturing and assembly unit for residential and commercial cooling products at Nalagarh (Himachal Pradesh) and a Tool Engineering and manufacturing facility at Noida.
Product Range
Subros is the largest manufacturer of automotive condensers in India. These condensers are manufactured in technical collaboration with Denso Corporation Japan. The company also producers of heating, ventilation, and air conditioning systems for automotive environmental comfort.
Subros produces Tubes & Hoses made from special grade aluminium material with wrinkle free bending and special grade rubber material for carrying high pressure environment friendly refrigerant from Compressor to Condenser to Evaporator in order to keep the vehicle cabin cool during summer.
The Company provides complete range of Bus Air conditioners ranging from 7.5 KW to 36 KW capacity. It also provides tailored system solutions for driver cabin AC of railway engines and working on development of units for Coach ACs.
Subros is also present in complete range of Residential Air Conditioners i.e. Window AC & Split AC system & supplying these products as OEM to all the leading brands in the Market. In addition to these, the Company provides a complete range of transport refrigeration solutions suitable for storage volume upto 50 cu.m for chilling & freezing applications.
Strengths
Subros is renowned for its expertise in automotive air conditioning solutions, supported by robust technological capabilities, manufacturing infrastructure, and a commitment to excellence. Initially focused on providing cooling solutions for the passenger vehicle (PV) segment, the company has then diversified its product portfolio to include thermal systems for homes, bus cabins, truck cabins, railway coaches, and driver cabins. Over the years, Subros has emerged as a key player in the automotive air conditioning segment, with nearly all major automobile companies as its customers.
Subros has a technical collaboration and an equity participation with Denso Corporation, Japan, a leading automotive manufacturer in the global market. Denso’s technical support, combined with Subros’s strong product development capabilities, considerable scale of operations, and low-cost structure, has enabled he Company to maintain a strong market position in the industry.
The company is committed to maintaining the highest quality standards across its products. This dedication has earned the company various certifications, including ISO/TS 16949:2009 and ISO 14001:2004, for its manufacturing facilities. These certifications ensure compliance with international quality and environmental management systems.
Subros is having an estimated 42% market share in the automotive air cooling segment within the passenger vehicle industry in the domestic market. In the past year, the company secured a prestigious tender worth Rs. 25 crore to supply roof-mounted ACs for Indian Railways coaches.
The Government of India recently mandated the usage of AC cabins in N2/N3 category vehicles, which will provide the company with incremental revenue opportunities from FY2026.
Subros invests significantly in research and development to innovate and develop energy-efficient and environmentally friendly products to meet the evolving needs of the automotive industry. The company maintains this substantial market share with robust R&D and product development capabilities, along with integrated manufacturing facilities. Over the last few years, Subros has expanded its product range to cater to other segments such as commercial vehicle OEMs and Indian Railways. With its strong in-house R&D capability, the company has locally designed and developed a wide range of reciprocating compressors compatible with eco-friendly refrigerants. These compressors are available in different sizes and capacities to suit all requirements and engine powers. Their unique design ensures that these compressors draw minimal power from the engine and operate efficiently and quietly. Additionally, the Company’s R&D team successfully developed battery and traction motor cooling systems, controller systems, and their integrations for the electric vehicle segment. In view of the ‘Make in India’ movement, the Company is focusing on ‘Design in India’ and ‘Manufacturing in India.’
Subros also exports its products to several countries worldwide. Given the emphasis and efforts made by the government to make India a self-reliant economy, the Indian automobile and manufacturing sector is expected to boost India’s FDI this year. This growth is driven by Production-Linked Incentive (PLI) schemes, which are designed to incentivize domestic manufacturing and thereby increase exports. All of these initiatives are benefits for the Company’s bright future.
The Company has a proactive approach in developing futuristic products, concentrating on growth, diversification, and profitability. The Company is also aggressively expanding existing segments and planning new product ranges in the immediate future, while focusing intensively on marketing in new areas.
The Company also developed another business segment – Tools and Dies- at its new facility in Noida with the capability of STEC (Subros Technical Engineering Centre). They considered this is an emerging segment as where all OEM and Tier 1 suppliers are focussed on localisation of Tools and Dies.
Outlook
The automobile sector in India plays a key role in macroeconomic expansion and serves as an indicator of overall economic performance. The Indian automotive industry has seen a robust revival in the past couple of years (excluding the COVID-19 era), supported by a remarkable recovery in economic activities and increased mobility. Demand sentiments for the majority of automotive segments, especially passenger vehicles, remain strong for the near future.
The mobility landscape will transform fundamentally over the next decades with trends like autonomous driving, connected cars, electrified vehicles, and shared mobility amplifying their impact. This evolving landscape presents an opportunity for Indian automakers to lead these disruptive changes and gain a competitive advantage.
The company is actively preparing to meet future customer demands in accordance with government regulations, emphasizing long-term technology development. It is currently advancing new product developments for internal combustion engines (ICE) and electric vehicles (EVs) across passenger vehicles, buses, trucks, and off-road vehicles, aligned with specific OEM project milestones. Additionally, new projects for rail cab and coach air conditioning are progressing through development and execution phases. As a result, the company’s products are poised for robust long-term growth, coinciding with expectations that passenger vehicle industry production will reach 7 million vehicles by 2030.
Expansion
Subros introduced air cooling products for hybrid and electric vehicles in FY22-23, with several other products in the pipeline for new-age vehicles, set to be introduced in the coming years. The company has already expanded its capacity at the Chennai plant and commenced supplies for new products. Subros consistently ensures sufficient capacity and product optimization plans, with a special focus on “Make in India.” Additionally, the company is increasing local manufacturing to meet the growing demand across various locations and market segments. Subros is focused on localization and cost optimization activities across all product segments to mitigate the impact of global economic factors, especially supply chain disruptions.
Financial Performance
For the Fy 2023-24, Subros reported revenue of Rs 3071 crore, up 9.4% from FY 2023 revenue of Rs 2806 crore. Net profit for the same period reported at R 98 crore, up by 104% from the previous year figure of Rs 47 crore. Net Profit margin for the FY 2024 increased to 3.2% from 1.7% in FY 2023. For the FY2023-24, EPS registered at Rs 14.9, up from Rs 7.35 in FY 2023.
Balance Sheet
Subros has a strong balance sheet with a conservative capital structure, nominal debt in its balance sheet, and healthy cash and liquid investments. As of March 31, 2024, the company had borrowings of around Rs 5 crore and cash and liquid investments of around Rs 165 crore. With capital expenditure requirements expected to remain at moderate levels in the near future, strong cash accruals are likely to help the company to maintain its robust financial profile and superior liquidity position.
Risk
Maruti Suzuki Motors India is the largest customer of the company, accounting for almost 70% of Subros’ business. The company operates in the auto equipment sector with a focus on air conditioning systems. Therefore, the high client and segment concentration risks are a major cause of concern for the company. In addition to this, there are also risks associated with commodity price escalations and logistic disruption.
Sector: Consumer Discretionary
Market Price: Rs. 638.00 as on today
FV: Rs 2/-
Stock Name: Subros Ltd
BSE Code: 517168, NSE Code: SUBROS
Market Cap.: Rs 4132 Cr
Book Value: Rs. 147
Segment: Auto Components & Equipments
Incorporation: 1985
Headquarters: Noida, Uttar Pradesh
