Automotive Axles jumped 7.46% to Rs 2490, as the stock staged a strong bounce back from the sharp sell-off witnessed in the previous trading session.
On Friday, the scrip had declined 5.53% to end at Rs 2,317.15.
On the BSE today, over 0.10 lakh shares of the company had changed hands in the counter so far, as against an average trading volume of 2036 shares in the past two weeks.
In the past three months, the stock has jumped 27.30% while the benchmark Sensex has lost 6.14% during the same period.
In an exchange filing made today, Automotive Axles said that ICRA has upgraded the company's long-term rating to "[ICRA] AA-" from "[ICRA] A+", with 'stable' outlook. The agency has also reaffirmed the company's short-term rating at [ICRA] A1+.
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ICRA said that the revision in the long-term rating factors in the significant improvement in Automotive Axles Limited's (AAL's) operational performance in FY2022 and 9M FY2023, and expectations that this will sustain over the medium term.
The ratings continue to factor in the company's established position as one of the largest independent axle manufacturers in India, catering to several large medium and heavy commercial vehicle (M&HCV) original equipment manufacturers (OEMs), namely Ashok Leyland (ALL), Daimler India Commercial Vehicles (Daimler), Mahindra Vehicle Manufacturers (M&M), Tata Motors (TML), VE Commercial Vehicles (VECV), Caterpillar India Private (CAT), Vehicle Factory Jabalpur (VFJ), Swaraj Mazda (SML), etc.
The company enjoys healthy relationships with its established client base and a strong share of business with most of the major OEMs in the M&HCV industry.
The rating strengths are partially offset by the customer concentration risk with AAL's top customer, ALL, driving 50-60% of its total revenues. The rating also considers the inherent cyclicality in the M&HCV industry.
However, ICRA notes the company's efforts to diversify its revenue streams by scaling up its presence in other segments such as defence and off-highway applications, which are expected to yield benefits over the medium to long-term.
Further, the company is exposed to the susceptibility of profitability to fluctuations in prices of key raw materials, although it is expected to pass on the impact of the same to its customers with some lag.
Automotive Axles Limited is a joint venture between BF Investment Limited, an investment holding company with investments in various Kalyani Group companies, and Meritor Inc., USA, a leading supplier of axles for CVs, with the JV partners holding 35.52% stake each. In February 2022, Cummins Inc. acquired 100% stake in Meritor, making AAL an indirect JV of Cummins Inc. AAL is currently the largest independent manufacturer of rear drive axle assemblies for CVs (primarily M&HCVs) in India. The company also supplies drum and disc brake assemblies for trucks, trailers, buses and coaches and is the second largest brake manufacturer in India.
The company's net profit had zoomed to Rs 50.68 crore in the quarter ended December 2022 from Rs 19.80 crore during the previous quarter ended December 2021. Sales rose 75.15% to Rs 655.78 crore in Q3 FY23 over Q3 FY22.
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