#PAT #GROWTH 5 Year CAGR 21.6%

In FY24, the net profit was ₹615 cr majorly led by rise in operating profit. In 9M FY25, the net profit was ₹357 cr v/s ₹521 cr and declined by 32% YoY. This was majorly led by degrowth in operating profit.

#EBITDA #MARGIN

In FY24, the EBITDA margin was 13.8% and expanded by 520 bps owing to softening of raw material prices and better product mix (premiumization). Contribution from premium ranges grew by more than 2x in last 4 years i.e., 9% in FY19 to 28% in FY23 for PC/UV and 13% in FY19 to ~23% in FY23 for 2W. Company imports 2/3rd rubber and 1/3rd is locally sourced. Margins from Q4 FY24 includes an impact of EPR provisions. In 9M FY25, the EBITDA margin was 11.1% v/s 14.1% in 9M FY24. This declined, mostly owing to rise in raw material costs. Also, the company has not been able to offset the same with similar price increases owing to competition.

#PAT #MARGIN

The PAT margin stood at 5.1% in FY24. In the OEM segment, large-diameter tyres now represent over 50% of the offerings, largely due to the rising demand for SUV tyres. In the replacement segment, while the share of these tyres is currently at 7%–8%, there is potential for this to increase to 25%–30% within the next two to three years. This shall further expand its profitability in the near future. In 9M FY25, the PAT margin was 3.6% (v/s % 5.8% in 9M FY24). This was mostly on account of decline in operating margin.

#ROCE

In FY24, the increase in ROCE was substantial owing to increased EBIT and the metric stood at 20.1%. This rise was on account of scale of operations, along with improvement in the market share across product segments. Going forward, ROCE would be at mid-teens due to reduced capex costs. The company emphasized its strategy that future investments will be smaller and spread across multiple phases, rather than committing to a single large expenditure. The capacity utilization at the end of FY24 was ~80%. For 9M FY25, the capacity utilization across its plants were at ~80%-85%.

#SECTOR #POTENTIAL

• The Indian tyre industry is projected to experience growth, with its revenue expected to more than double to $22 billion by FY32 from $9.5 billion in FY23. Growth in the industry will be driven by increasing vehicle demand, strategic government investments in infrastructure, and the expanding presence of vehicles fueling the replacement market. (Source: Crisil) • According to ATMA, India's domestic tyre industry is among the leading player on a global level, with annual production exceeding 20 cr units across various categories including two-wheelers, passenger vehicles, commercial vehicles, and off-road vehicles. • India's tyre industry has the potential to become a global manufacturing leader, especially as alternatives to China are sought due to geopolitical tensions. Total tyre exports during FY24 were ₹23,073 cr v/s ₹23,125 cr in FY23. The tyre Imports in India went up by ~19% in FY24. Tyres worth ~₹2,500 cr were imported during the period benefitting from low rates of duty under Free Trade Agreements (FTAs) signed by the country. • TheUScontinues to be the largest market for Indian tyres of total tyre exports from India in FY24. The top five export markets in FY24 included the US, Germany, Brazil, France, the Netherlands, Italy and the UAE. • The Indian off-the-road tyre market is set to grow at a steady rate, with the market size expected to reach ~2 cr units by 2032, up from ~1.1 cr units in 2023. this would be led by demand from infra spending for highways and bridges, expansion in agri sector, urbanization & modernization which is expected to fuel demand as OTR based vehicles are required for construction of houses & commercial buildings, and diverse applications across industries that includes recreation vehicles (dirt bikes, etc).

#COMPANY #OUTLOOK

• The company has entered a definitive agreement to acquire Camso’s three-wheeler off highway construction equipment bias’s tyres and rubber track business from Michelin group. The deal is valued at ~₹1,900 cr. This acquisition shall provide ownership of two manufacturing units in Sri Lanka to the company showcasing its focus towards premiumization, international business saliency and investment in high margin specialty segment. Camso is a premium brand in the OHT segment, tyres & tracks with strong brand equity in Nort America and Europe. It supplies products to over 40 OEMs (JCB, Kubota, CNH, Prinoth, Manitou, etc) and has an aftermarket network covering over 200 dealers. The acquisition is expected to close in Q1 FY26. • In its Maharashtra plant, the company is planning to increase its capacity by 30% (current capacity therein at ~2.7 cr tyres and capacity utilization stand at 90%) by the end of FY28. The proposed investment would be ~₹400 cr and would be funded via a mix portfolio and distribution network. of internal accruals and debt. The rationale would be to serve the growing demand from two & three-wheeler industry. • Their international expansion strategy focuses on key markets like Europe, the US, and Latin America with emphasis on segments like OHT, TBR and passenger car radials. Additionally, growth in the US market is anticipated as the company expands its product • The company expects robust demand in rural markets, particularly for farm trucks and two-wheelers due to government investments in rural infrastructure and a positive agricultural outlook. The company expects the bus, two-wheeler, and farm segments to experience high single-digit to double-digit growth while passenger car demand projected to remain in the low single digits. • It aims to secure a leading position in the electric vehicle tyre market, and focus on premium product offerings.

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Good morning

Aurionpro Solutions Limited Company Details Report

Aurionpro Solutions Limited is a global technology solutions provider offering a comprehensive suite of digital transformation services across banking, payments, transportation, and government sectors. With over two decades of industry expertise, Aurionpro has positioned itself as a trusted partner for enterprises seeking to navigate the complexities of technological innovation. Headquartered in Navi Mumbai, India, the company operates with over 30 offices in more than 30 countries. Their technology solutions have been implemented by over 300 clients worldwide which reinforces their commitment to delivering high-impact, efficient and scalable innovations. The company operates under two key business segments: 1. Banking & Fintech Solutions: Aurionpro offers robust digital banking solutions, payment processing systems, and transaction banking platforms. Their services include retail banking enhancements like self-service kiosks and queue management, as well as wholesale banking solutions such as cash management and Loan management. 2. Technology Innovation & Professional Services: Aurionpro's Technology Innovation Group (TIG) drives digital transformation through creating software and hardware solutions for transit segment and consulting & design for data centers. The company also plays a key role in smart cities and smart mobility where it offers e-governance solutions, intelligent transport systems, and automatic fare collection. As one of the few end-to-end transit solution providers, Aurionpro integrates hardware and software for metro and bus projects with a strong presence in Delhi, Chennai, Kanpur, Haryana in India and California, Mexico and Maldives on a global front.

Leadership & Transformation Under Ashish Rai: Since taking over as Group CEO in Oct 2023, Ashish Rai has played a pivotal role in reshaping Aurionpro’s strategy of driving digital transformation and unlocking new growth avenues. With an extensive background in global financial technology including leadership roles at FIS, Finastra, and Coforge, Rai has leveraged his deep industry expertise to streamline operations, enhance product innovation and expand the company’s global footprint. Under his leadership, Aurionpro has sharpened its focus on high-growth verticals, optimizing cost structures and accelerated revenue expansion. Ashish had joined the board of Aurionpro in FY22 as Vice-Chairman and has played an influential part in the turnaround of the company over the last 3 years. The company has raised capital through preferential share allotments over the last 2 years. The capital raise was done with the intention to acquire companies, capex for new offices and upgradation of facilities and to become a debt-free company. The first round was done at a share price of Rs 440 and the second round was done at a price of Rs 1050, the company raised a total of Rs 6,450 mn (excluding issue expenses).

Aurionpro has spent more than Rs2.5bn over the last 3 years to enhance its existing products and create new ones. The acquisition of Arya.ai has enhanced the company’s capabilities by integrating AI across their existing products. The partnership with Murex has improved post the acquisition of Fenixys and it helps the company co-develop IP’s and increase its presence in Europe and NAM. Its existing products - Icashpro+ and Smartlender continue to witness strong deal wins globally; Rs 1bn+ of deal with SBI in FY24 is a testament to its product offering and will provide a gateway to many more such deal wins across domestic / international banks.

Transit & Data centers to drive TIG (Technology Innovation group):

In the transit segment, Aurionpro recently won Delhi Metro and Chennai Metro. This is in addition to its deal-wins globally and demonstrates its strong capabilities as fully integrated player (hardware+ software) for smart gates, kiosks, AFC’s (Automated fare collection) over its peers. On the data center front, it has won a deal from RBI which was for a complex project highlighting its capabilities in consulting, design & implementation. With GOI thrust towards metro connectivity and focus on data centers, we expect these divisions to witness 30%+ CAGR over FY25-27E. On the smart city project, it is working on the Panvel project (Rs2bn), albeit is cautiously optimistic given the nature of business.

Aurionpro 2.0

Our conviction in Aurionpro stems from various business initiatives undertaken by the new CEO (joined the board in FY22 and promoted to CEO in FY24) towards R&D, developing new IPs, global fintech partnerships, and headcount addition. These initiatives have already started to yield positive results; and along with strategic acquisitions (funded towards capital raise and internal accruals) are all steps in the right direction. Our lateral checks across banking product & services (53% of revenue) & TIG (47%) segment reaffirms our thesis around product acceptance, and the growth opportunity.

Valuations, view & risks

Revenue diversification given presence across multiple tech-segments, huge TAM therein, deal-wins and healthy order book visibility provide greater comfort. 60%+ OCF / EBITDA conversion, superior return ratios, and strong organic growth adds to our conviction. We are factoring in 25.3%/25.6%/29.6% Revenue/EBITDA/PAT CAGR over FY24-FY27E, and value the company at 35x FY27 PE, resulting in a TP of Rs 2,020. Our base case estimates do not factor any acquisitions. Our bear case / bull-case TP is at Rs 1,270 / Rs 2,225. Key risks: Slowdown in BFSI IT spends; delay in metro projects and data centers.

Strong R&D and new product launches a key

Aurionpro has consistently demonstrated its commitment to innovation and technological advancement through robust research and development (R&D) initiatives over the past three years. During this period, the company has invested over Rs 2.5 Bn to enhance its existing product portfolio while simultaneously developing new solutions aimed at addressing emerging market needs. This substantial investment underscores Aurionpro's strategic focus on strengthening its capabilities, improving product functionality, and ensuring its offerings remain competitive in a rapidly evolving technological landscape. Looking ahead, Aurionpro is expected to continue allocating a significant portion of its revenue— approximately 7-8%—toward R&D activities. This sustained investment reflects the company's dedication to fostering innovation and expanding its solution suited to cater to diverse customer requirements. In particular, Aurionpro has recently introduced two new products, Auropay and Aurobees, which were developed over the past two years. Although these products are yet to generate meaningful revenue contributions, their future growth prospects appear promising. With large total addressable markets (TAM) for both solutions, these products are expected to gain traction and start delivering substantial revenue from FY26 onwards. While many of Aurionpro’s competitors are also investing heavily in R&D to enhance their offerings, Aurionpro’s consistent success in securing key deal wins sets it apart. The company's ability to maintain a strong sales pipeline, coupled with a solid order book, further highlights its capacity to translate its R&D investments into real-world business outcomes. These achievements reinforce the notion that Aurionpro’s strategic focus on innovation is yielding tangible results, positioning the company well for sustained growth and continued success in the industry.