1:1 Bonus Share: Auto Components Company enters into a MoU with Toyota Tsusho India Pvt Ltd

The stock gave multibagger returns of 390 per cent in 2 years and a whopping 650 per cent in 3 years.

NDR Auto Components Limited has announced a new project to manufacture seat insert fabric for four-wheelers. The company has signed a memorandum of understanding (MoU) with Toyota Tsusho India Pvt Ltd (TTIPL) and Toyotsu Vehitecs Co., Ltd (TVC). TTIPL will provide technical assistance for the project, which will be located in Gurgaon and implemented through a wholly-owned subsidiary to be incorporated within the next two months. The project represents an investment of approximately Rs 21.89 crore over the next two financial years.

The agreement with TTIPL and TVC focuses on the domestic manufacturing of seat insert fabric, currently 100% imported. While the details of consideration are still under discussion, the agreement stipulates that TTIPL, with support from TVC, will provide technical expertise. The promoters/promoter group of NDR Auto Components have no interest in TTIPL or TVC, ensuring the agreement is conducted at arm's length. The proposed capacity addition is 6 million units per annum, expected to be operational by the end of July 2026. Funding for the project will be provided by the holding company through equity and loans, sourced partly from internal accruals and partly from term loans. This initiative aligns with NDR's strategy to expand its presence, technical partnerships, and product offerings.

Additionally, NDR Auto Components Limited is in the process of incorporating a wholly-owned subsidiary, tentatively named "NDR Safety Systems Private Limited," for the purpose of manufacturing seat insert fabric and allied products. This new entity will be in the auto components industry and is expected to be incorporated by April 2025 with an initial paid-up share capital of Rs 10,00,000. This formation does not constitute a related party transaction, and no specific governmental or regulatory approvals are required. Since this is a new incorporation rather than an acquisition, details regarding acquisition costs, consideration, existing business background, and turnover are not applicable. NDR Auto Components will hold 100 per cent ownership of the subsidiary.

Earlier, the shares of the company ex-traded bonus issue of one equity share for every one equity share held by existing shareholders. The record date for bonus shares was Wednesday, September 25, 2024.

NDR Auto Components is a leading player in the automotive components industry, specializing in the design, manufacturing, and assembly of seat frames and trims for both four-wheelers and two-wheelers. Established in 2019, the company has rapidly expanded its operations to meet the growing demand for high-quality seating solutions. With manufacturing facilities strategically located across India, NDR Auto Components serves a diverse clientele, including major automotive brands like Maruti Suzuki, Toyota, and Suzuki. Their commitment to innovation and quality has enabled them to become a trusted partner in the automotive industry.

On Tuesday, shares of NDR Auto Components plunged 3.50 per cent to Rs 771.75 per share from its previous closing of Rs 799.70 per share. The company has a market cap of over Rs 1,800 crore with a 3-year stock price CAGR of 100 per cent. The shares of the company saw a spurt in volume by more than 1.70 times on BSE.

The shares of the company have a PE of 38x, an ROE of 16 per cent and a ROCE of 20 per cent. The stock gave multibagger returns of 390 per cent in 2 years and a whopping 650 per cent in 3 years. Investors should keep on this micro-cap auto stock.

Disclaimer: The article is for informational purposes only and not investment advice.