Why is JM Financial upbeat on Belrise Industries? Starts coverage with Buy

JM Financial has set a target price of ₹215 for Belrise Industries stock, valuing it at 25x FY28E P/E

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Belrise Industries share price today: Domestic brokerage JM Financial has initiated coverage on Belrise Industries (BIL) stock, an automotive component manufacturer, with a 'Buy' rating, citing multiple growth levers in place and a comfortable valuation. 

 

The company has not only made inroads into the sheet metal space, typically dominated by captive OEM suppliers, but also has captured 24 per cent market share in the overall two-wheeler (2W) metal components segment in India, making it one of the top three players in the segment, the brokerage said in its note. 

 

Analysts expect Belrise to deliver a CAGR of 13 per cent/14 per cent/29 per cent in revenue/Ebitda/PAT over FY25-28E, driven by higher CPV in 2Ws due to premiumisation and deeper customer penetration, expansion in four-wheelers (PV+CV), and balance sheet deleveraging.

 

JM Financial has set a target price of ₹215, valuing it at 25x FY28E P/E. The brokerage noted that BIL is currently trading at around 19x FY28E EPS, well below the peer average of 27x FY28E P/E.

 

The target price implies an upside potential of 28 per cent from Tuesday, November 25, closing price of ₹167.91.  ALSO READ | Nomura initiates Anthem with 'Buy', sees strong long-term CRDMO runway

Here's why JM Financial is bullish on Belrise Industries Stock:

Market leadership and sector tailwinds: Analysts noted that Belrise is a leading supplier of metal components in the two-wheeler segment. The total addressable market (TAM) for 2W metal products in India is projected to grow from ₹19-199 billion in FY25E to ₹348 billion in FY30P, reflecting a CAGR of 11-13 per cent. The 3W metal products market is also expected to nearly double during the same period, expanding from ₹15-17 billion to ₹27-29 billion. The company is well placed to benefit from this growth, supported by increasing content per vehicle (CPV) and strong relationships with OEMs. 

 

Rising content per vehicle in 2Ws: The company has delivered a strong performance over the years, posting an 11.5 per cent revenue CAGR between FY16–25, far ahead of the domestic 2W industry’s 1.4 per cent growth. This outperformance has been driven by deeper penetration with key clients and a steady pipeline of new product launches. As a result, CPV has risen to about ₹12,500 and is expected to climb to nearly ₹17,300—around 1.4x higher—over the medium term.

 

Expanding presence in 4W metal components: According to JM Financial, Belrise is expanding its presence in four-wheeler metal components, which currently contribute 11.7 per cent of its manufacturing revenue (FY25). The company plans to double this share over the next 2–2.5 years. The Indian passenger vehicle (PV) and light commercial vehicle (LCV) metal components market, estimated at ₹566 billion in FY25, is expected to grow at a 9 per cent CAGR to ₹877 billion by FY30, making it far larger than the 2W components market and providing a much bigger growth opportunity for Belrise.  ALSO READ | Nomura maintains 'Buy' on M&M, identifies the automaker as its top OEM pick 

Key triggers for value unlocking: Belrise's trading business, Badve Trading FZE, which accounts for around 21 per cent of the revenue, operates at a much lower margin (6 per cent) compared to the manufacturing business (14 per cent). As per analysts, a possible hive-off of this business could unlock meaningful value. The company is also streamlining its related-party structure to strengthen governance and enhance overall investor confidence.

 

However, the brokerage noted that Belrise's high dependence on its top customer exposes it to customer concentration risk. Regulatory uncertainty around anti-lock braking system (ABS) in <125cc 2W could impact growth in its braking systems vertical. Margin pressures could increase in weak markets if OEMs demand price cuts. At last, high competition and entry barriers in the 4W segment could delay growth and margin expansion.   Disclaimer: Target price and stock outlook has been suggested by JM Financial. Views expressed are their own.