Thread by @JShankarpure

Lets breakdown the business of #RACLGeartech

An In-Depth Thread 🧵

Q. What does the company do ?

A. RACL Geartech operates in Auto Ancillary industry

And makes products like Transmission Gears, Shafts , Cranes, Winch etc

Q. Who are the customers of the company ?

A. As the company operates in an auto ancillary space , Its customers will be OEMs like Scooter, Cars , Tractor etc manufacturers

Q. What was the history of the company ?

A. The history of the company in one infographic -

This shows that the company was able to whole turnaround

From being Bankrupt at one stage to now having a Target of reaching revenue up to 500 Cr by FY25

From being Bankrupt to having customers like - BMW, Kuboto, Yamaha, KTM, Honda

Customer list of RACL Geartech -

Their customer are very sticky in nature , That means that they don't leave RACL Geartech due to its Moats

Its Moats are -

1⃣ R&D

2⃣ Tech Innovation

3⃣ Product Quality

Lets discuss them -

1⃣ R&D -

15% of their Employee Costs is R&D with the customer

2⃣ Tech Innovation-

Initially they started Focusing on Technology

For the next 7-8 years they only grew for 4-5%

Since then have grown highly

3⃣ Product Quality

BMW & KTM (Competitors) are Both their customers, This shows that they provide quality customer experience

And a reason for stickiness of customers

Company has also 10 year Multi year contract with a Top Electric Vehicle Manufacturer to be their Sole Supplier

As discussed earlier that this company manufacturers Transmission Gears

Many will have a Question that How is it different from Differential Gears?

Here is difference in One Infographic-

Electric Vehicle Impact -

As RACL Geartech manufacturers Gears , Less Gears are used in Electric Vehicles

Due to that their Volume will be down in this segment of EV but the margin will be high as

Making Gears for EV Requires very high precision

And Transmission Gears will add more value than Differential gears which are made by Sona Comstar

Now lets discuss their Financials & Reasons behind so High Operating Profit Margin that their Peers

As We can see all of their peers have OPM% between 9-15%

But RACL Geartech's OPM% in 24% 🤯

The Reasons behind this high OPM% are -

1⃣ In-House Raw Material Manufacturing

Earlier 100% of Forging Work was from outside now 40% is done In-House only

2⃣ Exports Also improve Margins of the company ie. 70% of revenue comes from Exports

3⃣ Pricing Power is also a reason

All Reasons for High OPM% Listed in One Infographic

Now Lets discuss the financials of the company -

They are continuously on a Up trend - Revenue , Profit & OPM

End of Thread

Thanks for reading this thread till end 🙏🙏

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