Studds Accessories

a) Studds Accessories which has started its journey in 1972 from manufacturing first helmet in a garage is today manufacturing 7 million helmets and motorcycle luggage every year. Studds Accessories Limited has today grown to become the largest two wheeler helmet manufacturer in the world. UNIQUE- Their laboratory is the only one in the industry (in India) to be certified by European Safety Agency, and Safety - They use one of the best technologies in the world to produce certified products. In FY19-20, they have manufactured 66 Lakhs helmets up from 58 Lakhs last year.

b) Headquartered in Faridabad, the Company has four state-of-the-art facilities manufacturing an extensive array of over 50 products. Backed by a rich legacy, a strong product portfolio and a robust dealer network, the Company has more than 26% market share in India and offers products to more than 40 countries across the globe.

c) The company has 4 business verticals.

1. Helmets

2. Motorcycle Accessories

3. Face Shields and Face Masks.

4. Bicycle Helmets.

d) As on 31st March 2020, Studds Accessories has a network of 385 dealers spread across the globe and 7 EBO’s in India. The company has 2053 Number of employees.

Presence of the Company

The company has a presence in almost 40 countries in the world.

Competitiveness

a) Innovation- 16 New Products launches in the last 3 years.

b) Excellence- 21 No. of quality/safety tests done in-house (per helmet as per ECE 22.05 standard).

c) Adaptability- 7 Different sizes are available in the helmet.

d) Presence- Over 385 Active dealer network across India as on 31st March 2020 across more than 40 countries.

Look and Feel of the Products of the Company

 Full-face helmet





Flip-up full-face helmets   



Sporting helmets and Industrial Helmets 


Revenue Model of Studds Accessories Limited

(a) The company sells a helmet in the range of Rs.825 to 2165 under the brand name Studds having a market share of 25% as of FY18.

(b) The company sells a helmet in the range of Rs.2300 to 9800 under the brand name SMK having a market share of 27.79% as of FY18.

(c) Apart from selling a helmet the company also in the business of Motorcycle Accessories like Jacket, Gloves, Glass, etc.

(d) The 90% of the Revenue comes from Helmet division and 10% comes from Motorcycle Accessories. (e) The 92.3% of the business comes from the Domestic Market and rest 7.97% comes from Export. Latest Interaction with Management- 16.05.2020



How Helmets are Manufactured in Studds Factory



 FY19-20 Analysis:

Business Highlights of Studds Accessories Limited

1. Despite challenges in the market Studds have performed well and the top line grew by 10.85%. Besides, growth in the top line, the operating EBIDTA grew at 41.16% and the PAT grew by 81.05% from the preceding year.

2. This year Studds has made significant investments to develop a world-class R&D facility, backward integration by manufacturing EPSL in the plant, with an endeavor to improve the quality of the products and meet stringent safety standards.

3. During the year, the company has stepped up efforts to improve relations with its dealers and distributors and it helped to significantly increase its market share. As of 31st March 2020, the network of 385 dealers is spread across the globe and 7 EBO’s in India.

4. This year the company has launched new products i.e. Titan Fiber, Titan Carbon, Sub Urban. They are planning to further bolster the segment with the launch of riding gear, jackets, armours, elbow guards, knee guards, and shoes. 5. This year company has sold 66.5 Lakhs (Domestic + Global) and globally has a Domestic market share in Two Wheelers helmets as 25.66%.

Studds Accessories Limited FY20-21 Performance:

Some Stats of Studds Accessories Unlisted Shares in FY2021?

1. Total helmets manufactured by Studds stands at ~64 lakh.

2. Exported to more than 45 countries.

3. Largest manufacturer of helmet in the world.

4. Studds Accessories has 4 manufacturing units in Haryana.

5. Having human capital of 2722.

Covid-19 Impact?

Despite of washout of business and almost shutdown of manufacturing units in the first quarter of FY2021 due to nation wide lockdown announced by government of India to mitigate the spread of corona virus, Studds in the second half of the fiscal managed to deliver all the orders received during the year. Because of Covid, the availability of raw materials remained a challenge for the company throughout a year. However, Studds worked closely with their suppliers and tried to get all the raw materials in time so to complete the orders in time.

Studds Accessories Limited 5 years Financial performance at glance? 

Opportunities available for Studds Accessories Limited?

With growing safety concerns, governments around the world have mandated the use of helmets for riders. It has added impetus to a largely fragmented helmet market and continues to open newer opportunities in domestic as well as international markets for Studds Accessories.

New Products Launches in FY2021



Industry Overview of 2W and helmet Market

1. The two-wheeler market in India shrank significantly in 2020 due to the COVID-19 pandemic, resulting in several state and national level lockdowns across the nation.

2. In the month of March-2021, Scooters, motor cycles, and mopeds all posted increases in sales as compared to the same period a year ago, with gains of 74.0%, 74.1%, and 36.2% respectively. This is mainly due to very less activity done last year in the same period.

3. India is the largest market for 2-wheelers (e.g. scooterettes, mopeds, and motorcycles) as well as home to one of the world’s most competitive manufacturers of 2-wheeler helmets with 3.5 Crores units produced each year.

4. In India, the market for two-wheeler helmet is expected to grow around 25% by 2022 . As consumers become more aware of safety, coupled with advanced safety features being introduced in two-wheeler helmets, the market for two-wheeler helmets is expected to grow significantly.

5. According to the Motor Vehicle Act, it is mandatory for all two-wheeler riders to wear helmets. Furthermore, the government has adopted a policy that prohibits the production, sale, and use of helmets that lack an ISI certification. The policy became effective on June 1, 2021. This will be a major step for improving the safety of riders of two-wheelers. The government has taken a number of steps aimed at ensuring the safety of riders, which is a positive development. The helmet industry will benefit from all these factors.


Key Salient Points of FY18-19

1. The Company has shown 16% Revenue Growth in FY18-19 as compared to last year.

2. The Company has shown 23% PAT Growth in FY18-19 as compared to last year.

3. The Company has almost debt Free. D/E is 0.247

4. The Company has Excellent Return Ratios ROE and ROCE in the last 3 years.

Key Salient Points of FY19-20

1. Studds has clocked the revenue of 431 Crores in FY19-20 up by 10.8% as compared to last year.

2. Studds has clocked an EBITDA of 103 Crores in FY19-20 up by 41% as compared to last year.

3. Studds has clocked the PAT of 74 Crores in FY19-20 up by 84% as compared to last year.

4. EPS for the year 2019-20 stands at 37.

5. The total debt on books is 27 Crores and Net-worth of 216 Crores. So, D/E is 0.12. 6. RONW of FY19-20 is 34%.

Financial Analysis of FY20-21

1. In FY20-21, the revenue of Studds Accessories has increased by 15% despite problems in the economy due to COVID-19. In FY20-21, they clocked a revenue of Rs.484 Crores as compared to 420 Crores last year.

2. EBITDA for FY21 stands at 115 Crores as compared to 103 Crores in FY20. This translate into margins of 23.7% in FY21 as compared to 24.5% last year.

3. PAT remains flat at 73 Crores similar to last year. PAT remains same, due to high depreciation as they have added new manufacturing plants and increase of finance cost.

Balance Sheet Analysis

a. In FY20-21, the Property, Plants and Equipment has increased from 154 Crores to 260 Crores, as company is focussing on Capex.

b. They have a debt of ~27 Crores in FY21 and Net-worth of 290 Crores. So, D/E is less than 1.

c. Current ratio = 1.43x ( Very comfortable)

4. ROE stands at 25% which is quite decent.

5. In FY20-21, Studds has generated a Free cash flow of 37 Crores. Last year it was Zero.

Financial Analysis of Studds Accessories Unlisted Shares Fy21-22

1. Company has sold 59 Lacs helmets in this fiscal year.

2. Market share of 25.5% in helmets in India.

3. 80% Revenue comes from Domestic and 20% comes from Exports.

4. Last year, the first quarter saw the massive impact of covid-19. However, post the pandemic, the two-wheeler industry has started to grow.

5. Revenue of Studds has reduced from 479 Crores in Fy21 to 462 Crores in Fy22. The impact was due to covid-19 second wave.

6. Gross Margin has gone down from 52% in Fy21 to 43% in Fy22. This is due to an increase in the prices of raw materials.

7. Due to high cost of materials and other expenses, the PAT has reduced from 73 Crores to 28 Crores.

8. Inventory of helmets has increased from 28 Crores to 43 Crores.

9. In Fy21-22, the Studds Unlisted Share has done Capex of 56 Crores. Now, as they have generated only 11 Crores cash from Operations, they need 44 Crores from other sources. For that, they have sold one FD of 11 Crores, 25 Crores is used from cash available in the books and remaining 8 Crores from other sources. So, overall we can say the results are very bad for Studds Accessories.

Valuation of Studds Accessories

Total Outstanding Shares = 1.96 Crores

Studds Unlisted Market Price = 900 Mcap = ~1760 Crores

The current valuation looks stretched based on Fy23 results.