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INVESTMENT INSIGHTS

Check Before You Invest : Enkei Wheels (India) Ltd

BSE: 533477 NSE: ISIN: INE130L01014
  |   Sector:  Automobiles   |   Industry:  Auto Ancillary

Snapshot

Q.1 Which industry/sub-sector does Enkei Wheels (India) Ltd belong to?
Enkei Wheels (India) Ltd belongs to the Automobiles sector, operating specifically within the Auto Ancillary segment.
Q.2 Is Enkei Wheels (India) Ltd a good quality company?
Enkei Wheels (India) Ltd is a weak quality company, based on a inconsistent multi-year financial track record.

This assessment is based on company’s performance on Revenue growth, ROCE, Equity and Assets, key margin ratios, cash conversion cycle, and debt to cash flow from operations and how it compares with its long term averages.

Q.3 Is Enkei Wheels (India) Ltd undervalued or overvalued?
Enkei Wheels (India) Ltd appears Somewhat Undervalued, as its key valuation ratios are lower than their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios Current 5-year
Historic Median
Price to Earnings 75.03 49.64
Price to Book 3.08 4.03
Price to Sales 0.71 1.45
EV to EBITDA 9.6 19.90
Q.4 Is Enkei Wheels (India) Ltd a good buy now?
Enkei Wheels (India) Ltd is not a good buy now, based on weak price trend analysis suggesting prices may fall. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

  • How has it performed on generating Profits?

    By checking its Revenue growth, Gross, Operating and Net Margins compared to its last 5-year median.

  • How efficiently has it utilized Capital?

    By checking its ROCE, ROA, ROE and its Cash Conversion Cycle.

  • How is it managing its Debt?

    By checking its Debt to Equity and Cash Flow from Operations.

A: What are the trends in revenue and profit margins?

Q.1 Revenue growth of Enkei Wheels (India) Ltd?
Enkei Wheels (India) Ltd revenue growth is 15.1% for FY-2025, which is below its 5-year CAGR of 32.8%, indicating slower growth.

Q.2 Gross Profit margin of Enkei Wheels (India) Ltd?
Enkei Wheels (India) Ltd Gross profit margin which is the profit after deduction of direct costs, is 7.1% for FY-2025, which is in line with its 5-year median of 7.1%, indicating stable margins.

Q.3 Operating Profit Margin of Enkei Wheels (India) Ltd?
Enkei Wheels (India) Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is 9.2% for FY-2025, which is above its 5-year median of 7.32% indicating increasing margins.

Q.4 Net Profit Margin of Enkei Wheels (India) Ltd?
Enkei Wheels (India) Ltd Net Profit Margin is 0.53% for FY-2025, is below its 5-year median of 0.56%, indicating decreasing margins.
Current Level 5-year
Historic Median
Gross Profit Margin (%) 7.1 7.1
Operating Profit Margin (%) 9.2 7.32
Net Profit Margin (%) 0.53 0.56

B: Does the business utilize capital efficiently?

Q.5 Return on Asset of Enkei Wheels (India) Ltd?
Enkei Wheels (India) Ltd Return on Asset is 0.88%, which is in line with its 5-year historical median of 0.88%, indicating stable asset utilization efficiency.

Q.6 Return on capital employed (ROCE) of Enkei Wheels (India) Ltd?
Enkei Wheels (India) Ltd Return on capital employed is 6.57% for FY-2025, which is in line with its 5-year historical median of 6.57%. The current ROCE is below its estimated weighted average cost of capital (WACC) of 14%, indicating value preservation.

Q.7 Return on Equity (ROE) of Enkei Wheels (India) Ltd?
Enkei Wheels (India) Ltd Return on equity is 2.16% for FY-2025, which is in line with its 5-year historical median of 2.16%, indicating the business is making similar use of its shareholders capital.

Q.8 Cash conversion cycle of Enkei Wheels (India) Ltd?
Enkei Wheels (India) Ltd Cash conversion cycle is 44 days, above its 5-year historical median of 38 days, indicating deteriorated working capital management. However, you need to compare this with its peers in the industry.
Current Level 5-year
Historic Median
Asset Turnover (x) 1.67 1.4
ROE (%) 2.16 2.16
ROCE (%) 6.57 6.57
Cash Conversion Cycle 44 days 38 days

C: How much debt does the business have and is it at a sustainable level?

Q.9 Debt to Equity ratio of Enkei Wheels (India) Ltd?
Enkei Wheels (India) Ltd Debt-to-Equity ratio is 0.88, which is above the industry average of 0.40, indicating higher debt levels in the industry.

Q.10 Debt to cash flow from operations of Enkei Wheels (India) Ltd?
Enkei Wheels (India) Ltd Debt to cash flow from operations is 4.81, which is at a unhealthy level.

Ownership & governance

D: Promoter shareholding and pledge status of Enkei Wheels (India) Ltd?

Q.1 Promoter shareholding and pledge status of Enkei Wheels (India) Ltd?
Promoters hold 74.97% of the Enkei Wheels (India) Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Enkei Wheels (India) Ltd performance compare with that of its Peers?

Q.1 Revenue growth of Enkei Wheels (India) Ltd vs industry peers?
Enkei Wheels (India) Ltd revenue CAGR is 32.80%, compared to the industry median CAGR of 11.89%, indicating faster growth and gaining its market share.
Profit Metrics
Current Level 5-year
Industry Median
Revenue Growth (%) 15.1 11.9
Gross Profit Growth (%) 30.2 16.2
Operating Profit Growth (%) 43.6 14.7
Net Profit Growth (%) 66.7 20.1
Operating Efficiency
Current Level 5-year
Industry Median
Asset Turnover (x) 1.67 1.24
ROE (%) 2.16 11.65
ROCE (%) 6.57 13.5
Cash Conversion Cycle (days) 44.23 46

Valuation & price assessment

Q.1 Stock return of Enkei Wheels (India) Ltd over the last decade?
Over the last 9 year(s), the stock has delivered a CAGR of 11.3% based on the current price.
9Y 5Y 3Y 1Y
Share Price
CAGR		 11.3% 6.2% -2.9% -15.5%
Q.2 Valuation ratios of Enkei Wheels (India) Ltd vs historical?
The current P/E ratio of 75.03 is higher than its historical median of 49.64, indicating that the stock is trading above its historical average valuation.
Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?
Valuation Ratios Current 5-year
Historic Median		 5-year
Industry Median
Price to Earnings 75.03 49.64 28.71
Price to Book 3.08 4.03 2.99
Price to Sales 0.71 1.45 1.35
EV to EBITDA 9.6 19.90 11.85

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