Divgi TorqTransfer Systems IPO

The company is among the few Indian companies and a leading player in manufacturing and supplying transfer case systems and dual-clutch automatic transmissions (DCT) to automotive OEMs in India. They are the only Indian player supplying transfer cases to global OEM companies. 

They manufacture and supply a variety of products under the broad categories of 

• Torque transfer system for four-wheel and all-wheel drive
• Synchroniser system for manual transmission and DCT
• Transmission system for EVs
• Rear wheel drive manual system

The company's profit in the quarter that ended in March FY22 was ₹46.15 crore, an increase of 21.3% from the previous year. In the same period, revenue from operations recorded a 25.3% increase to ₹234 core, with ₹213.4 crore income received from the top five customers.

On the operating front, EBITDA (earnings before interest, tax, depreciation and amortisation) increased by 26.4% to ₹65.6 crore with a margin expansion of 25 bps at 28.06% from FY21. In the six-month period that ended on September 30, 2022, the company made a profit of ₹25.66 crore against a revenue of Rs 133.72 crore.

Fortunately, the company has also reduced its borrowings significantly to ₹0.26 crore in FY21 from ₹50.41 crore in FY20. At the end of September 30 2022, it had a borrowing of ₹0.5 crore. 

Divgi TorqTransfer Systems Ltd. IPO Objective

• To fund capital expenditure requirements to buy equipment/machinery for their manufacturing facilities and meet general corporate purposes.

Why should you invest in the Divgi TorqTransfer Systems Ltd. IPO?

Here are your top reasons to invest in the IPO. 

• It is one of the few Indian companies to have served both systems-level solution providers and component kit suppliers to global OEMs and Tier-I transmission systems suppliers.
• The management has thirty-plus years of experience in the automotive industry. 
• They offer turnkey solutions and components to automotive OEMs across India, the USA, China, Korea, Russia, and others.
• They cater to a domestic and global clientele of marquee customers.

Divgi TorqTransfer Systems Ltd. Noteworthy Highlights

• Their top five customers contributed 91.28%, 92.86%, and 86.94% of total revenue in the last three fiscal years of 2022, 2021, and 2020 respectively. 
• Between 2020 and 2022 fiscals, the company recorded a 28.30% CAGR in their profit after tax (PAT). 
• The Indian EV market is expected to grow by 108-110% CAGR from 2021-2026 in volume and value.

Divgi TorqTransfer Systems Company Financials

Know before investing

Strengths

1. Strategically located manufacturing facilities capable of manufacturing high-precision components meeting system-level design intent.

2. They offer turnkey solutions and components to automotive OEMs across India, the USA, China, Korea, Russia and others.

3. They cater to a domestic and global clientele of marquee customers.

Risks

1. Their business is concentrated on the top five customers. So a loss of any customer will impact their business adversely.

2. Price volatility of raw materials and components can adversely affect the company’s future revenue.

3. To stay competent they must quickly anticipate and adapt to the changing demands of their customers.

Competitive Peers