Gkn Driveline (India) Ltd Unlisted Shares

Are you looking for a fundamentally strong, debt-free company with a global parentage and consistent dividend history? GKN Driveline (India) Limited is a market leader in the manufacturing and supply of driveshafts to original equipment manufacturers (OEMs) in the automobile industry. Backed by the global technology of GKN Plc (now part of Melrose Industries) , this unlisted gem combines world-class engineering with exceptional financial discipline.

Global Parentage: The GKN Legacy

• Parent Group: GKN Plc, UK – a global leader in automotive driveline technology.

• Global Reach: Over 50% of the 80 million new cars sold annually contain GKN technology.

• Network: 54 production facilities across 23 countries, supplying over 90% of the world’s car manufacturers.

• Current Ownership: Since April 2018, GKN Plc has been part of Melrose Industries Plc , a proven industrial turnaround specialist.

• Technical Collaboration: GKN Driveline India has a technical collaboration with GKN Driveline International GmbH, Germany since 2003, ensuring continuous access to state-of-the-art technologies.

About GKN Driveline India:

• Incorporated: July 25, 1985.

• Core Business: Manufacturing and sale of driveshafts to automotive OEMs.

• Technology Edge: Continuous technology import and absorption from the GKN Group, supported by global expertise in marketing, HR, application engineering, and supply chain management.

Manufacturing Footprint:

The company operates five manufacturing plants across India:

• Haryana (2 Plants)

• Maharashtra (1 Plant)

• Tamil Nadu (1 Plant)

• Gujarat (1 Plant)

Prestigious Clientele:

GKN Driveline India supplies to the who’s who of the automotive industry, including:

• Toyota

• Ford

• Bajaj

• Fiat

• Honda

• Suzuki

• (Formerly Hyundai, until a pricing dispute)

Financial Performance Analysis

FY20-21 Performance (Pandemic Impact):

• Revenue: Declined by 29.43% due to COVID-19 lockdowns. However, exports remained stable with a negligible decline of just 2% .

• EBITDA Margin: Improved to 18% (from 14% in FY20) due to one-time benefits like the Vivad se Vishwas scheme settlement.

• Dividend: Declared an interim dividend of ₹62 per share for FY21.

FY21-22 Performance (Strong Recovery):

Historical Snapshot (FY18-20):

*(Note: FY20 saw a de-growth of 12.63% due to lower market demand and loss of the Hyundai QXi model over a pricing dispute.)*

Key Investment Highlights:

1. Global Technology Backing: Continuous technology transfer from GKN Germany ensures the company remains at the forefront of driveline innovation.

2. Debt-Free Balance Sheet: Zero debt provides immense stability and safety during economic downturns.

3. Exceptional Profitability: With an ROCE of 53% and ROE of 22% , the company generates outstanding returns on capital.

4. Cash Flow Machine: Converts nearly 100% of EBITDA into cash , a hallmark of a high-quality business.

5. Consistent Dividend Payer: History of paying high dividends (₹62-₹146 per share), rewarding shareholders generously.

6. Market Leadership: Dominant player in the driveshaft segment with a client list featuring top global and Indian auto brands.

7. Resilient Model: Despite COVID disruptions and the loss of a major client (Hyundai), the company has maintained profitability and a strong balance sheet.

Risks to Consider:

• Auto Sector Cyclicality: Directly tied to the performance of the passenger vehicle industry, which is cyclical.

• Client Concentration: While the client list is impressive, the loss of any major client (like Hyundai) can impact revenues.

• Raw Material Prices: Margins are sensitive to fluctuations in steel and other material costs.

• Competition: Faces competition from other auto ancillary players, though its technology edge provides a moat.

Valuation & Opportunity:

GKN Driveline India offers a rare combination of global technology, debt-free operations, exceptional cash flow, and high dividends. For investors seeking a stable, profitable, and well-managed company in the auto ancillary space, this is a compelling opportunity.

Ready to Add a Debt-Free Auto Ancillary Leader to Your Portfolio?

Buy Unlisted Shares of GKN Driveline (India) Ltd exclusively through Unlisted Network.

Invest in a company with global technology, exceptional profitability, and a 53% ROCE.