NDR Auto Components

Massive Scale Up Ahead?

NDR Auto Components Ltd. manufactures automotive seat sub-components and assemblies, specifically for four-wheeler and two-wheeler vehicles. Their product portfolio includes:

1. Seat Frames

   • Material: Pressed and welded metal structures

   • Function: Form the skeletal structure of a car seat

   • Why Needed: Provide structural strength to the seat and ensure crash safety compliance.

2. Trim Assemblies

   • Material: Fabric, foam, and synthetic leather stitched together

   • Function: The “visible” part of the seat that a passenger sits on

   • Why Needed: Provides comfort, aesthetics, and branding differentiation (e.g., in high-end trims)

3. BIW Parts

   1. Body-in-White (BIW) refers to the stage in automotive manufacturing where a vehicle's sheet metal components are welded together to form the structural framework, prior to painting and assembly of moving parts like the engine, doors, and interior fittings.

4. Sunshades

   1. Sunshades are used in rear windows and side windows to improve cabin comfort, reduce glare, and block heat.

   2. NDR auto has got orders for these products from Maruti and Toyota

The promoters (Relan Family) of NDR Auto also have another listed business - Bharat Seats where Relan Family and Maruti Suzuki are both promoter entities.

NDR Auto Components supplies seat assemblies and BIW parts to Bharat Seats Ltd. (BSL), a Tier-1 supplier that assembles complete seating systems for automotive OEMs like Maruti Suzuki and Toyota. NDR is tier 2 supplier while Bharat Seats is tier 1 supplier to OEMs.

NDR Auto components is part of supply chain of below models

Over the years NDR has formed different JVs to get more business from Maruti and Toyota

In FY25, NDR did 713 Cr revenue at 10% EBITDA and 53 Cr PAT. Notably CFO was decent with 84 Cr generated.

Why NDR Auto is interesting?

1. Hayashi Telempu JV (50:50 with Japanese firm)

   • Hayashi Telempu is $2.1B sales company out of Japan

   • Total investment that will be made by both HT and NDR: ₹66.6 Cr (₹33.3 Cr by NDR)

   • Products: Ambient lighting, NVH parts, silencers, fenders, etc.

   • First order received from Toyota for ambient lighting

   • Production starts: July 2027 (in Bangalore)

   • Revenue Target: ₹300–400 Cr over 5 years for combined JV

   • Margin guidance: 10–12%

Product basket could add ₹20–25K content/vehicle, doubling from current ₹10–15K per vehicle.

2. New business worth 250-300 Cr for FY26

   1. Kia seat solutions business

      1. This business is for Kia Syros

      2. This business performance depends on how many Kia variants with artificial leather seats vs regular fabric sell as in these variants NDR’s content per vehicle is more

      3. However, management did say sales for artificial leather variant were lesser in Q4

      4. This business could pave the way for increasing wallet share with Kia

   2. New business wins for Maruti E-Vitara and Grand Vitara

      1. As per the concalls, this business seems to be for sunshades product and BIW parts for Maruti

3. 100% subsidiary for Toyota business which can yield 100 Cr revenue by FY28

   1. Toyota Tsusho India (TTI) and Toyotsu Vehitecs Company (TVC).TVC holds the global patent for this fabric used in seat-integrated airbags.

   2. Seat trims would be the product here

      1. These trims reinforce PU seat pads to enable safe deployment of airbags in seat-mounted airbag systems

      2. Ensures airbags deploy without distortion during accidents.

      3. Currently imported by Toyota from Vietnam/China.

      4. NDR will localize production, becoming a key supplier to Japanese OEMs amid India's growing safety regulations.

      5. NDR will set up a 100% subsidiary; TVC provides technical assistance in exchange for royalty.

         • CAPEX: ₹21.89 crore over 2 years

         • Start of Production: July 2026

         • Payback Period: 2.4 years

         • FY28 Revenue Target: ₹100 crore

      6. Market Potential:

         • Content per vehicle: ₹350–400

         • Target Volume: 3 million vehicles

         • OEMs expected to adopt across all variants due to safety push.

4. Seat premiumisation is major tailwind for players like NDR Auto

   

Guidance for FY30

• NDR has given ₹3000 Cr guidance for FY30

  • Management says ₹2000 Cr would come existing organic business

  • Remaining ₹1000 Cr would come from more JVs and M&A

  • Senior leadership is being recruited from Minda to build more OEM relationships

• FY26 could see ₹200-₹300 Cr worth of additional sales implying close to 900-1000 Cr revenue while for by FY28 revenues could be ₹1200-₹1300 Cr

• Margins would remain between 10-12%. In FY25 margins expanded due to -

  • Cost efficiencies

  • Premium product mix

  • Better utilization of existing capacity

  • Better negotiation on RM pricing from vendors

Key Risks

1. Aggressive revenue growth can dilute margins

   1. Management did allude to the fact that they would have to take some low margin business going forward

2. Client concentration risk

   1. 70% of business comes from Maruti right now and rest from Toyota and Kia. This is client concentration risk for the company

3. Slowdown in PVs or key models in India

   1. Any slowdown in sector or lower sales of key models where NDR is primary supplier could materially impact the numbers for NDR

4. RTPs with Bharat Seats

   1. There is 7 Cr loan given to Bharat seats

   2. 42 Cr worth of trade receivables were from Bharat Seats in FY24

5. Working Capital Risk

   1. OEMs can squeeze working capital of T1 and T2 suppliers and depress cash flows and ROCEs for NDR Auto

Valuations

I think valuations are stretched. I have a heuristic to value 18-20% RoE companies at around 5-5.5 P/B max especially when the management quality is unproven. So it seems to me 20-30% overvalued. Even if do bear, base and bull case, I do not anticipate great IRRs. For me, <2000 Cr company hurdle rate is 25-30% min. I cannot give more than 30x multiple to an auto ancillary which usually go through cycles and can get working capital squeezed from OEMs at times. NDR might do better than this, but as of now lot of the upcoming growth is priced in.

Overall NDR Auto’s ambitious guidance makes a good case to track the company as per the management sales can go from 700 to 3000 Cr in 5 years. Some aggressive business wins in last few quarters do exemplify this aggression but fast growth sometimes comes at cost of margins or increased working capital constraining cash. Both these parameters are paramount for shareholder wealth creation.