Good Growth and Attractive Valuations; Initiate at Buy

We initiate on Belrise with a Buy rating and Rs135 PT, 31% upside. We expect a healthy 12% revenue CAGR over FY25-28E, led by rising 2W demand, industry premiumization, increasing content-per-vehicle, and expansion in 4Ws and exports. We expect 12% EBITDA and 18% EPS CAGR over FY25-28E, along with deleveraging. We find its 18x FY26 PE attractive given the strong growth outlook; any simplification of group structure can further boost valuations.

A leading 2W metal component player: Belrise is one of India’s leading 2W (two-wheeler) metal component players with ~24% market share in its key product categories, which include chassis and exhaust systems. It derives ~67% of its revenues from 2W components, ~9% from 4Ws (four-wheeler) and ~20% from commodity trading.

Rising 2W demand: After the 35% fall over FY19-22, 2W wholesales grew at 13% CAGR over FY22-25, although FY25 was still 6% below FY19. Despite some softness in demand in recent months and potential cost push from new braking norms in 2026, we remain optimistic as we see demand tailwinds from income tax cuts, easing liquidity, and PSU wage hikes in FY27. We expect 11% industry production CAGR over FY25-28E, including exports

Increasing content-per-vehicle: Belrise is expanding its portfolio, including proprietary components such as steering columns, brakes and filters, to increase its 2W content-pervehicle by 38%. 2W industry premiumization offers a tailwind too as the value of chassis in premium bikes is ~2.2x of commuter bikes. Belrise also has large headroom to grow with its existing customers as its content-per-vehicle with even its second-largest OEM is ~30% below its top customer.

Expanding in 4Ws and exports: Indian 4W component market is ~3x the size of 2W parts industry. Belrise is expanding its 4W portfolio, including proprietary products such as crossbeams and chassis systems (H-One acquisition), and is aiming to double its 4W revenues in 2-3 years. It is also expanding exports and has new orders from two European OEMs.

Strong growth: We expect 12% revenue and EBITDA CAGR over FY25-28E, which along with deleveraging, should drive 18% EPS CAGR. Improving capacity utilization should lift ROCE (pretax) from 13% in FY25 to 15% by FY28E. We expect balance sheet improving from Rs28bn net debt at end-FY25 to Rs6bn net cash by end-FY28 (including Rs22bn IPO proceeds).

Initiate with Buy: Belrise’s 18x FY26E PE is attractive, in our view, for its good growth outlook and expanding portfolio. Most Indian auto part companies are trading at an average 1.8x PEG (ratio of consensus FY26PE to FY26-28E EPS CAGR), while Belrise is at 0.8x on our estimates. We initiate at Buy and Rs135 PT at 18x FY27E PE, 31% upside. Related-party sales and purchases formed 26% and 29% of Belrise’s 9MFY25 revenues respectively, and any group structure simplification could lift valuations. Key risks include weaker 2W demand, high dependence on top customer (Bajaj in our view), and any adverse related-party event.