Milestone Gears IPO

Milestone Gears Limited IPO Strengths

Diverse and Complex Product Portfolio with Applications Across Multiple Sectors

Milestone Gears Limited manufactures a wide array of high-precision transmission components, including bull gears, rear axles, and internal ring gears. This diverse portfolio caters to large and stable sectors like agriculture and construction, while also positioning the company to capitalize on high-growth areas such as electric vehicles, locomotives, and wind energy. This multi-sector presence diversifies its revenue streams and reduces dependence on any single industry, providing a robust foundation for sustained growth and resilience against sector-specific downturns.

Long-Standing and Entrenched Customer Relationships with Leading OEMs

Milestone Gears Limited has cultivated deep, trust-based relationships with a strong base of domestic and global original equipment manufacturers. The company’s average association with its top 10 customers exceeds 18 years, demonstrating its reliability as a supplier. These long-term partnerships are built on a foundation of consistent quality, timely delivery, and a collaborative approach to product development, creating significant entry barriers for competitors and ensuring a stable and predictable revenue base.

Strategically Located Manufacturing Facilities with End-to-End In-House Operations

Milestone Gears Limited operates nine manufacturing facilities across Punjab, Haryana, and Himachal Pradesh, providing proximity to key customers and reducing logistics costs. Its integrated operations encompass in-house forging, machining, and heat treatment, allowing for complete quality control over the entire production process. This end-to-end capability, combined with access to stable hydel power in Himachal Pradesh, enhances operational efficiency, ensures supply chain resilience, and enables the company to respond agilely to dynamic customer requirements.

Experienced Technocrat Promoters and a Senior Management Team

Milestone Gears Limited is guided by its promoters, Ashok Kumar Tandon and Aman Tandon, who bring extensive industry experience and technical expertise. This leadership is supported by a seasoned senior management team with deep knowledge in operations, business development, and customer relationships. The promoters’ strategic vision, coupled with the management’s strong execution skills and a large, skilled workforce, has been instrumental in steering the company’s growth and navigating the complexities of the precision engineering industry.

More About Milestone Gears Limited

Milestone Gears Limited is a prominent player in the Indian precision engineering landscape, specializing in the design and manufacturing of mission-critical transmission components. Established in 1984, the company has evolved from a domestic supplier to a globally recognized partner for original equipment manufacturers (OEMs).

Core Business and Product Portfolio

The company’s expertise lies in producing high-tolerance, complex components that are essential for power transmission in heavy machinery. Its key products include:

• Bull Gears and Rear Axles: Critical for the drivetrains of tractors and construction equipment.

• Internal Ring Gears and Bevel Gears: Used in various gearbox applications across sectors.

• Spindles, Rock Shafts, and Transmission Gears: Precision components for transmitting torque and motion.

Manufacturing Prowess and Quality Assurance

Milestone Gears operates nine manufacturing facilities with a combined built-up area of over 398,000 square feet. Its integrated manufacturing model includes:

• In-house Forging: Powered by hammers and upsetters, allowing for precision forging of components.

• Advanced Machining: Over 375 CNC machines ensure high accuracy in gear hobbing, shaping, and grinding.

• Specialized Heat Treatment: SCADA-controlled and CQI-9 compliant processes ensure components meet stringent metallurgical standards.

The company’s facilities are certified under IATF 16949, ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018, reflecting its commitment to quality, environmental management, and occupational health and safety.

Global Customer Base and Export Footprint

Milestone Gears supplies its products to a prestigious clientele, including Mahindra & Mahindra, TAFE, Escorts Kubota, JCB, and CNH Industrial. It has also successfully expanded its global reach, exporting to ten countries including the USA, UK, Germany, and Brazil. The company’s strategy involves deepening relationships with existing customers by increasing its “share of wallet” and onboarding new global OEMs, particularly in the EV and locomotive sectors.

Industry Outlook

The Indian precision components and forging industry is poised for significant growth, driven by strong tailwinds from both domestic and international markets.

Overall Industry Growth

The Indian auto component industry is a key economic driver, with the forging sector being a critical subset. The industry is benefiting from the government’s ‘Make in India’ initiative, Production Linked Incentive (PLI) schemes, and the global ‘China-plus-one’ sourcing strategy. This is positioning India as a preferred global manufacturing hub for precision engineering components.

Growth Drivers

• Agricultural Equipment: India is the world’s largest tractor market by volume. The market is projected to reach approximately 1.5 million units by Fiscal 2030, growing at a CAGR of 8.2% from FY2025.

• Construction Equipment: Driven by massive government infrastructure spending and a real estate boom, this market is projected to expand to approximately ₹1,732.5 billion by Fiscal 2030, at a CAGR of 14.0%.

• Electric Vehicles (EVs): The Indian EV passenger vehicle component market is a high-growth segment. It is projected to reach approximately ₹122.6 billion by Fiscal 2030, growing at a CAGR of 15.5%, with transmission components being the largest sub-segment.

• Locomotives and Windmills: Government investments in railway infrastructure and renewable energy are fueling demand. The Indian railway market is projected to reach ₹3,646.8 billion by FY2030 (CAGR: 5.7%), and the windmill component market is expected to hit ₹512.1 billion (CAGR: 5.2%).

Favourable Market Dynamics

The transition to stricter emission norms is driving the need for more advanced and precise components. Furthermore, European and American OEMs are increasingly shifting their procurement to India to leverage cost competitiveness and a robust manufacturing ecosystem, creating substantial export opportunities for established players like Milestone Gears.

How Will Milestone Gears Limited Benefit

• Capitalize on the exponential growth of the Indian EV market by supplying high-speed precision gears and drivetrain components, leveraging its dedicated EV facility and existing customer relationships.

• Increase its export revenue by leveraging the global ‘China-plus-one’ strategy and its established relationships with international OEMs like John Deere and CNH Industrial.

• Deepen its market share in the stable and growing agricultural sector by offering assembled 4-wheel-drive transmission units, moving up the value chain.

• Tap into the high-value locomotive and windmill sectors by utilizing its precision engineering capabilities to supply heavy components, diversifying its revenue base.

• Benefit from government incentives under the ‘Make in India’ and PLI schemes, which support domestic manufacturing and enhance cost competitiveness for capital expenditure and exports.

• Improve operational efficiency and profitability through debt reduction from IPO proceeds, leading to lower finance costs and an improved debt-to-equity ratio.

• Enhance its manufacturing capacity and capabilities with the new greenfield project, enabling it to meet the growing and complex demands of existing and new customers across all its target sectors.

Peer Group Comparison

Name of the company	Face value per equity share (₹)	P/E Ratio	EPS (Diluted) (₹ per share)	RoNW (%)	NAV (₹ per share)
Milestone Gears Limited	2.00	[●]	2.45	17.47%	14.03
Bharat Forge Ltd	2.00	69.93	20.05	12.10%	192.86
Peer Group
Sona BLW Precision Forgings Ltd	10.00	49.38	9.92	17.70%	90.79
Happy Forgings Ltd	2.00	35.38	28.37	15.40%	196.25
Ramkrishna Forgings Ltd	2.00	23.67	22.95	11.70%	167.78
Shanthi Gears Ltd	1.00	38.49	12.52	23.83%	52.53

Key Strategies for Milestone Gears Limited

Leveraging Technology to Grow in High-Growth Sectors

Milestone Gears Limited will leverage its precision engineering capabilities to expand its product portfolio in high-margin sectors like electric vehicles (EVs), locomotives, and windmills. The company intends to utilize IPO proceeds to set up a new facility for manufacturing high-speed EV gears and heavy components for other sectors. By focusing on these high-growth areas, Milestone Gears aims to diversify its revenue streams, capture new market opportunities, and reduce cyclical dependence on its traditional sectors.

Increasing Exports and International Market Presence

Milestone Gears Limited plans to significantly increase its exports, capitalizing on the ‘China-plus-one’ strategy and growing global demand. The company will focus on markets in the United States, Europe, and Japan, leveraging its existing relationships with global OEMs. This strategy aims to diversify its revenue base, mitigate regional economic risks, and position the company as a global supplier of critical precision components, thereby enhancing its long-term growth prospects and market reach.

Sustaining and Strengthening Market Share in Core Sectors

Milestone Gears Limited intends to sustain and strengthen its market leadership in the agricultural and construction equipment sectors. The strategy involves adding new products to existing lines, increasing wallet share with current customers, and onboarding new clients. A key initiative is moving up the value chain by offering fully assembled 4-wheel-drive transmission units to OEMs. This approach will deepen customer relationships and solidify its position as a trusted, value-added supplier in these core markets.

Expanding Capacity and Setting Up a New Manufacturing Facility

Milestone Gears Limited is focused on expanding its manufacturing capabilities to meet rising demand. A portion of the IPO proceeds is earmarked for a new greenfield manufacturing facility in Himachal Pradesh. This facility will be dedicated to producing EV components requiring high-speed precision gears and heavy components for locomotives and windmills. This expansion is crucial for increasing production capacity, entering new product categories, and supporting the company’s long-term growth objectives.

Reducing Operational Costs and Improving Efficiencies

Milestone Gears Limited is committed to continuous improvement in operational efficiency and cost reduction. The company plans to introduce new technologies, expand automation, and explore the installation of rooftop solar power across its facilities. Initiatives also include reducing tool consumption and shifting to sustainable packaging. These efforts are aimed at optimizing manufacturing processes, lowering power and labour costs, and enhancing overall productivity and profitability.