Rico Auto Industries- Strong Engineering Capabilities To Ensure Double Digit Growth In Near-Term: ICICI Direct

ICICI Direct Report

We recently interacted with the management of Rico Auto Industries Ltd. and were impressed by the new order wins at the company by marquee original equipment manufacturer names like BMW and Toyota largely driven by its strong engineering capabilities.

Rico started as a 100% ancillary to Hero MotoCorp Ltd. gradually expanded into passenger vehicle space with Maruti Suzuki India Ltd. It is now serving more than 30 domestic, global customers across all categories. Hero MotoCorp, however, is its largest client.

Also, Rico has developed paper based friction material for two-wheeler clutch applications.

Content/vehicle in two-wheeler typically ranges from ~Rs 2,000-2,500/vehicle, which has increased to ~Rs 4,500 primarily including a pair of alloy wheels. Currently, alloy wheel capacity is pegged at ~3.5 million units that is being expanded to ~4.5 million units with peak revenue potential at ~Rs 500 crore.

The management said it was single source supplier for a set of products to most foreign OEMs for its domestic as well as export demand.

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