LKP Research has initiated coverage on Belrise Industries Limited with a BUY Call, projecting a 12-month price target of Rs 192 against the current market price of Rs 154. The report underscores Belrise's robust business model, sector-specific momentum, and ongoing strategic transformation. Investors can anticipate a potential return of approximately 25%, driven by superior earnings growth, consistent premiumization, and business diversification, though a close watch on trading business margins and group restructuring risks is warranted. The investment thesis combines a sharp financial outlook, operational scale, and rising CPV (content per vehicle), signifying a compelling opportunity for discerning market participants.

Strong Sectoral Tailwinds and Growth Catalysts

Belrise Industries stands at the confluence of sectoral momentum and evolving consumer demand. The company, with its powertrain-agnostic products, has capitalized on post-pandemic auto recovery, rural income resurgence, and government-driven GST and tax reliefs, especially in the two-wheeler segment. Premiumization and electrification trends in scooters and motorcycles continue to buttress revenue streams—making Belrise’s portfolio future-proof against ICE-to-EV disruptions.

Dominant Two-Wheeler Franchise

With a commanding 24% market share in the two-wheeler metal products market, Belrise Industries is a market leader. Sheet metal components constitute nearly 73% of the consolidated topline, with motorcycles accounting for 70% and scooters contributing 30%. The company supplies critical components—chassis, exhaust systems, swing arms, and steering columns—primarily to Bajaj Auto, Honda Motorcycles, Royal Enfield, and Hero Motocorp, among others. Strategic expansions into high-value chassis systems and premium-bike categories are set to boost CPV from Rs 12,500 to Rs 17,300 in the next 18-24 months. The company also manufactures proprietary steering columns for EVs like Ola and Ather, further diversifying its markets.

Accelerated Four-Wheeler and Export Expansion

Belrise’s forays into the four-wheeler (PV, CV) space and exports augment its growth trajectory. The four-wheeler business—9% of topline in FY25—is expected to rise to 13% by FY28E, riding on order wins from Japanese OEMs and business alliances enabled by the H-One and Mag-Filter acquisitions. Belrise supplies over 250 components to Jaguar Land Rover’s overseas plants and targets direct integration into European and Asian OEM supply chains. The acquisition of H-One in Japan has strengthened Belrise’s expertise in high-tensile steel fabrication, positioning it strategically for further market penetration and light-weighting solutions.

Business Segmentation and Financial Performance

The diversified business structure underpins resilient financials and operational leverage. The company has 17 operational facilities (expanding to 20), serving major auto clusters across nine states, and expects capex of Rs 8 billion for future plant expansions and asset upgrades. Belrise achieves over Rs 103,736 million in projected revenues for FY27, with an EBITDA margin improving to 13% and PE multiples dropping from 29.7x in FY24 to an estimated 18.6x by FY27E. Exports currently contribute about 6% of turnover, with expansion plans underway.

Comprehensive Product Portfolio

Belrise offers powertrain-agnostic products across more than 1,000 SKUs, ranging from critical safety and suspension systems to advanced polymer and sheet metal components. This broad product suite safeguards the company from adverse regulatory changes and technology disruptions, while new product launches—like air tanks, cross car beams, and advanced filtration systems—generate incremental revenues and drive up CPV for both two-wheeler and four-wheeler clients.

Group Structure Simplification and Value Unlock

Efforts toward consolidating related group entities may unlock significant shareholder value. Belrise has initiated the integration of subsidiaries like Badve Autocomp Pvt Ltd, aiming to reduce related-party transactions and bolster transparency. A streamlined structure is expected to be accretive to valuation multiples, with improved governance and operational clarity further galvanizing market confidence.

Risk Factors and Outlook

Investors should remain vigilant regarding the company’s exposure to two-wheelers and Bajaj Auto, along with the low-margin trading business that currently constitutes 21% of revenues. Management’s commitment to scaling down trading activities and resolving group complexity remains critical. Further, dependence on legacy ICE components (notably exhausts) may require adaptation as EV adoption accelerates, though Belrise’s strategic product repositioning and OEM relations provide a mitigating edge.

Key Financial Metrics and Stock Levels

Belrise’s current market price stands at Rs 154, with a 12-month target set at Rs 192 and potential upside near 25%. The stock’s 52-week high/low is Rs 163/Rs 89. Earnings per share are projected to rise from Rs 5.5 (FY25E) to Rs 9.6 (FY28E), with ROE improving toward 13.2% and ROCE toward 15.9% by FY28E. The management’s guidance suggests robust operating and free cash flow generation, combined with sector-leading capex discipline.

Investment Rationale and Target

LKP Research's BUY call is rooted in Belrise’s ascent along the automotive value chain, margin expansion, and resilience to drivetrain shifts. The stock merits accumulation for investors seeking auto-ancillary exposure, with a one-year target of Rs 192 and intermediate resistance at Rs 163 and support at Rs 89. Monitor strategic execution, trading margin improvements, and progress toward an integrated group structure for optimum returns.