Hi-Tech Gears hits new high; surges 26% in 2 days on healthy outlook

In the past six weeks, the stock of Hi-Tech Gears has soared 56 per cent; while, thus far in the financial year 2024, it has zoomed 159 per cent

Shares of Hi-Tech Gears hit a new high of Rs 652.55, as they rallied 10 per cent on the BSE in Friday’s intra-day trade, surging 26 per cent in the past two days on healthy business outlook.

In the past six weeks, the stock of auto ancillary company has soared 56 per cent; while, thus far in the financial year 2024, it has zoomed 159 per cent.

Hi-Tech Gears recently gave a clarification on increase in volumes and said that the company is freely traded on the stock exchanges and is unable to comment on the volume/movement of share price of the company which is purely market driven.

The product portfolio of the Hi-Tech Gears comprises precision gears, shafts, transmission components, and engine components catering to diverse segments of two wheeler, passenger vehicles, commercial vehicles, and agri and off-road vehicles.

For the first nine months (April to December) of financial year 2023-24 (9MFY24), Hi-Tech Gears had posted consolidated profit after tax (PAT) of Rs 96.4 crore. The company reported PAT of Rs 23.1 crore in the entire previous fiscal 2022-23 (FY23). In 9MFY24, EBITDA (earnings before interest, taxes, depreciation, and amortization) stood at 13.3 per cent, as compared to 12.09 per cent in FY23.

The Indian Automotive Industry is worth more than USD $222 billion and is expected to reach USD $300 billion by 2026 expanding at a CAGR of 15 per cent. It has been estimated that the vehicle penetration will reach up to 72 vehicles per 1000 people by 2025.

Indian Government aims to have electric vehicles (EVs) comprise 30 per cent of new private vehicle registrations, amounting to 80 million EVs, by 2030. The EV market is estimated to reach Rs 50,000 crore (US$ 7.09 billion) in India by 2025.

Government initiatives like vehicle scrappage policy, Café 2 norms and Atmanirbhar Bharat are expected to drive demand for precision auto ancillary components.

Over the years, promoters have developed a sound understanding of market dynamics and healthy relations with customers and suppliers, which has resulted in the group achieving an operating income CAGR of 17 per cent for the last 3 years through FY23. The business risk profile of the group is expected to support consistent improvement in operating income, with the group expected to achieve operating income growth of 8-10 per cent over the medium term, according to CRISIL Ratings.

The rating agency believes the financial risk profile of the company shall continue to improve with reduced term debt obligations and net cash accruals of the company being utilized for working capital requirements.