Auto Ancillary stock to buy now for an upside of 45%; Recommended by Emkay Global

Synopsis: Shriram Pistons & Rings jumped sharply today after a domestic brokerage turned bullish on the company following its recent industry acquisition, which it expects will meaningfully contribute to the organisation.

The shares of this leading company engaged in the manufacturing of pistons, piston pins, piston rings, and engine valves for various automotive companies in the domestic and export markets are in focus because of its recent acquisition. In this article, we will dive more into the highlights of this acquisition and the brokerage comments.

With a market capitalisation of Rs 13,876 crore, the shares of Shriram Pistons & Rings Ltd are currently trading at Rs 3,150 per share, down 2 percent from its previous day’s closing price of Rs 3,214.45 per share. Over the past five years, the stock has delivered a robust return of 930 percent, outperforming NIFTY 50’s return of 88 percent.

Acquisition Highlights

Shriram​‍​‌‍​‍‌​‍​‌‍​‍‌ Pistons & Rings Limited (SPRL) informed that it has signed a definitive agreement to take over 100 percent ownership of Antolin Group’s three Indian companies, namely Antolin Lighting India, Grupo Antolin India, and Grupo Antolin Chakan. The acquisition is valued at Rs 1,670 crore and is a significant strategic move for SPRL to venture beyond traditional engine components into the rapidly growing automotive interiors sector.

The acquired businesses provide a broad portfolio of premium-value car interior solutions such as headliners, sunvisors, door panels, ambient lighting systems, front-end carriers, overhead consoles, and capacitive touch panels. The five plants spread over Pune, Chakan, and Chennai areas, along with revenues close to Rs 1,179 crore, make these companies ideal candidates for turning immediate synergies at SPRL.

This initiative also perfectly fits the diversification strategy of SPRL, where they have recently made investments in TGPEL, EMFi, and Takahata, all of which are powertrain-agnostic and future-ready products. As a result of this transaction, SPRL will establish a long-term Technology Licensing Agreement with the Antolin Group, thus securing the link to worldwide design, manufacturing expertise, and new product development capabilities.

The company is confident that this deal will help it stay competitive, open operational synergies, and consolidate its growth plan for the long term. The closing of the transaction is scheduled for January 2, 2026, and it is subject to the usual regulatory ​‍​‌‍​‍‌​‍​‌‍​‍‌approvals.

Analyst Comments

Leading domestic brokerage house, Emkay Global, has revised its target price by 37 percent, from Rs 3,400 per share, to Rs 4,650 per share, signalling a massive upside of 45 percent from its previous day closing price of Rs 3,214.45 per share.

According to Emkay Global, the acquisition of Antolin India greatly increases the growth visibility of Shriram Pistons & Rings, resulting in a 3–7 percent increase in EPS and a 30 percent+ upgrade in its sales expectations for FY27E–FY28E.  Even though sales, EBITDA, and earnings are expected to expand 23–26 percent yearly through FY28E, with RoCE jumping dramatically to 24 percent, the company is still trading at a 57 percent discount to peers despite this improved outlook.  

In conclusion, the acquisition of Antolin strengthens Shriram Pistons & Rings’ long-term growth runway and sets it up for a significant transition into higher-value, non-ICE product categories.  The transaction has undoubtedly improved investor confidence due to its great potential for synergy, access to global technologies, and a significant improvement in analyst financial predictions.  

However, how well SPRL completes the integration, grows the acquired portfolio, and meets the growth targets set by both management and analysts will determine if the company can actually reach the anticipated 45 percent upside.

Written by Satyajeet Mukherjee

Disclaimer

The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post Auto Ancillary stock to buy now for an upside of 45%; Recommended by Emkay Global appeared first on Trade Brains.