DRMA Recommended as BUY, Strong Performance in Second Half of 2025 and More Attractive Prospects for 2026

PT Dharma Polimetal Tbk (DRMA), an issuer in the manufacture of motor vehicle components, recorded solid performance throughout 2025 with revenue reaching Rp5.9 trillion, up 7.8% year-on-year. This growth was primarily driven by the two-wheeler (2W) segment, which rose 12.5% year-on-year, far exceeding the industry’s growth of just 1.3%. This performance reflects an increase in market share as well as improving operational efficiency. The 2W segment itself contributes around 62% of total revenue, making it the main pillar of DRMA’s growth. Segmen 4W Experienced Pressure but is Starting to Recover On the other hand, the four-wheeler (4W) segment experienced a 6.5% year-on-year decline to Rp1.3 trillion in 2025, due to weak industry sales in the first half of the year. However, conditions began to improve in the second half of 2025. Component sales rose 15.6% compared to the first half of 2025, helping to contain the deeper decline and serving as an early signal of recovery in this segment. Business Expansion and Profit Boost To strengthen its business, DRMA acquired PT Mah Sing Indonesia to enhance OEM supply capabilities and enter the aftermarket. In addition, the DKI joint venture also recorded an increase in exports to 132 containers (from 86 in 2024). This combination of strategies drove net profit growth of 13% year-on-year in FY25. Entering Renewable Energy, Capturing EV Opportunities DRMA is also beginning to diversify into the renewable energy sector through its subsidiary PT Dharma Energy Resources (DER). The main focus is on recycling lithium-ion batteries for the automotive industry, covering processes from pre-treatment to hydrometallurgy, with outputs such as black powder, aluminium, and copper. The company has also partnered with PT Bestindo Car Utama for managing BMW battery waste in Indonesia, and is exploring collaborations with Korean partners. This initiative was introduced at the Indonesia International Motor Show 2026. 2026 Targets: Double-Digit Growth with Stable Margins Entering 2026, DRMA targets organic revenue growth of around 10% year-on-year, driven by market share expansion and product line strengthening. Net profit margins are expected to remain stable in the low double-digit range. Additionally, the company will expand SKUs for components and spare parts variations for ICE, HEV, and BEV vehicles. Attractive Valuation, Recommendation Upgraded to BUY With strong performance and improving prospects, the recommendation for DRMA shares has been upgraded to BUY with a target price of Rp1,250 per share. The current valuation is around 8.3x P/E, which is still considered attractive. The continued growth in the 2W segment and recovery in 4W serve as the main catalysts for future performance improvement. Risks to Watch Out For Some risks that investors need to monitor include: - 2W sales weaker than expected - Slowdown in the 4W segment - Unsupportive macroeconomic conditions Conclusion DRMA demonstrates increasingly strong fundamentals, supported by growth in the main segment, business recovery, and expansion into the renewable energy sector. With an attractive valuation and future growth potential, this stock is one worth watching in the automotive sector.