GNA Axles (GNA) was established in 1993. The company is among the leading manufacturers of rear axles shafts used in on-highway & offhighway vehicular segments in India. Apart from rear axle shaft (accounts for 85% of revenue), it also manufactures other shafts (6% of revenue) & spindles (9% of revenue). The company has two manufacturing facilities both located in Punjab with a total annual capacity of 2.30 million (mn) rear axle shafts, 0.4 mn other shafts and 0.3 mn spindles. In terms of revenue bifurcation, as of FY16, domestic: export mix was at 45: 55, respectively. Over the years, GNA has focused more on the export market where its revenue contribution has increased from 35% in FY12 to 55% in FY16. The company exports rear axle shafts globally with North America, Europe accounting for 45%, 33% of its export revenue, respectively. GNA has a strong relationship with some global OEMs & tier-1 suppliers. It plans to raise ~| 130 crore, of which | 80 crore would be used for purchasing new plant & machinery & | 35 crore for its working capital requirement. Over FY12-16, revenue, EBITDA, PAT registered a CAGR of 6%, 12%, 11%, respectively. On the balance sheet front, as of FY16, its net debt to equity was at 0.8x with RoE & RoCE at 18.8% & 22.6%, respectively.

Valuation : At the upper price band of | 207, the stock is available at 17x on FY16 post issue diluted EPS of | 12.1. We believe GNA has a decent business model (strong customer base & diversified revenue) and financial performance. However, we believe the company is also fairly valued at the IPO price.