Analysis: Igarashi Motors India Limited

Growth thesis

Igarashi Motors India designs and manufactures DC motors for automotive powertrain and comfort applications, with 90% of revenue currently derived from internal combustion engine (ICE) actuation systems. Key segments include torque actuators (ETC, EGR, wastegate) and comfort motors (seats, windows), with post-merger with Agile targeting 33% comfort motor revenue. Growth hinges on reducing ICE exposure to two-thirds by FY2020 via EGR/turbocharger expansion and diversifying into non-automotive motors (furniture, pumps). BLDC motor adoption, initially 1/3 of new RFQs by 2020, and 20-25% annual capacity additions will drive volume. However, management has consistently delayed EGR/turbo revenue targets (originally 50% of sales in 4-5 years) and BLDC commercialization, with EGR share remaining in low single digits despite FY2018 revenue growth of just 8%.

Why is Igarashi Motors India Limited stock rising?

• Post-merger with Agile, comfort actuator motors expected to constitute over 33% of the merged entity's portfolio.
• Targeting to reduce ICE exposure from 90% to less than two-thirds post-merger, and further to 50% with inclusion of non-automotive.
• Entering non-automotive segment with electric motors for furniture applications, starting supply by end of 2017 via a supermarket chain.
• Investing $1 million in brushless DC motor development, targeting one out of three RFQs to be BLDC by 2020.
• Plans to have five BLDC motor samples ready by end of calendar 2017 for torque actuator and comfort applications.

Research report

companyname: Igarashi Motors India Limited ticker: IGARASHI sector: Automotive Components / Electric Motors Igarashi Motors India Limited (IMIL) designs and manufactures permanent magnet DC motors and BLDC motors for automotive powertrain actuation and consumer appliance applications. It operates as a Tier-2 supplier to global automotive Tier-1 companies, with proprietary intellectual property in torque actuator motors – the motors that control engine throttle, exhaust gas recirculation (EGR), ...

Catalysts

capex, new product segment, acquisition inorganic

Growth guidance

No guidance

Management consistency

mixed