Wabco India is the market leader in the air and air-assisted brake systems for CVs (commercial vehicles). Despite growth in the domestic CV industry slowing down, the company recorded a strong performance in the nine months ended December 2011. Net sales grew by 17 per cent year-on-year to Rs 736 crore and net profits by 22.5 per cent to Rs 114 crore.

Increased sourcing by its parent company, Wabco, for its global clients, improved aftermarket sales, demand for higher technology compressors for engines (post the new emission norms introduced in late 2010), and strong demand for its newer products such as ABS (Anti-lock Braking Systems) could have aided growth.

Besides, what might have strongly worked in favour of the company at a time when other component players were reeling under high input costs is its traditionally superior margins. Wabco India managed to record an operating margin of 35 per cent for the first nine months of 2011-12.

Going forward, interest rate cuts will see economic activity gaining speed. This would help improve domestic CV sales. The company's efforts to increase its content supplied per vehicle in the form of automated manual transmissions, electronically controlled air suspension and clutch actuation systems, will also improve realisations.

(This article was published on May 5, 2012)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.