Emkay Global Initiates Buy on Shriram Pistons and Rings, Targets Rs 4650

Emkay Global Financial Research Report: Shriram Pistons and Rings

Key Takeaways

• Shriram Pistons and Rings (SPRL) management reiterated confidence in sustaining industry-beating growth, targeting 8-10% outperformance versus the underlying auto industry.
• The company aims to scale up its legacy business through diversified portfolio opportunities, market-share gains, and higher focus on exports and aftermarket business.

Business Growth and Strategy

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• SPRL is seeing rapid scale-up and margin expansion across its acquired entities, including EV components, precision plastic injection molding, interiors, and lighting, driven by superior and competitively priced technology-enabled offerings.
• The company is also focusing on margin expansion in its Antolin business to 15% (from 10%) through operational reset and insourcing synergies.
• SPRL is looking for further synergistic mergers and acquisitions (M&A) that meet specific criteria, including being largely automotive, powertrain-agnostic, technology-driven, margin accretive, growth-centric, and India-focused.

Outlook and Recommendations

• We forecast 26% revenue growth, 22% EBITDA growth, and 20% EPS growth for FY26-28, with return ratios exceeding 20%.
• We reiterate a BUY rating and a target price of Rs4,650, based on a price-to-earnings ratio (PER) of 25x for December 2027 estimates.