Release Date: August 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue growth of 13% on a year-over-year basis, with lead-acid revenue growing by 15% after adjustments.
- Strong volume growth in both domestic and international automotive segments, with domestic aftermarket growing by 11% in volume.
- International automotive segment saw a substantial increase of 45% in volume, driven by new accounts in North America.
- Clean energy business experienced a 20% revenue growth, particularly in mobility and energy storage packs.
- Operating margin improved by 0.6-0.7% year-over-year due to higher realizations and price increases.
Negative Points
- Industrial segment experienced a 5% volume decline, primarily due to a 20% year-over-year decrease in the telecom segment.
- Higher trading revenue mix in inverter batteries led to margin dilution.
- Increased costs in metals like copper and plastics impacted margins.
- Telecom segment's volume decline attributed to higher base numbers from the previous year and ongoing lithium migration.
- CapEx requirements for new energy business are substantial, with approximately 2000 crores needed for ongoing projects.
Q & A Highlights
Q: Can you give us some flavor on the export demand and outlook going forward?
A: We are seeing good traction for AGM batteries in Latin American and European markets, apart from our regular markets in the Middle East, Asia, and Africa. The number of countries we are exporting to has increased to over 55-60. We aim to grow the export business at a CAGR of 15% over the next two to three years. The lithium project cells will cater to both energy storage and mobility markets.
Q: What is driving market share gains, and how do you see the market share over the medium term?
A: Domestically, the two-wheeler and four-wheeler aftermarket segments have shown volume uptake, helped by new brands and better availability and visibility at the local level. Internationally, the volume jump is more significant. We have around 35% market share in four-wheeler aftermarket and 23% in two-wheeler OEMs. In industrial UPS, we have a 40-45% market share, and in telecom, around 50%.
Q: Can you provide details about the Highstar partnership for NMC technology?
A: It is a technology fee arrangement with Highstar, coupled with our internal development of NMC cells. Beyond that, there are no further details to share at this moment.
Q: What is the full-year volume guidance for the auto and industrial segments?
A: We do not provide specific guidance. However, we expect the four-wheeler aftermarket to sustain a 7-8% growth rate and two-wheelers around 12-13%. We aim to grow higher than the market in two-wheelers.
Q: Can you explain the volatility in EBIT margins for the new energy business?
A: The margins fluctuate due to the mix and volume of products like packs and chargers. Costs related to setting up cell units and research also impact margins. In a stable scenario, hardware manufacturing can achieve 7-8% margins, and pack manufacturing around 13-15%.
Q: Are there any CapEx plans for the lead-acid battery business?
A: We aim to maximize existing plant capacities through throughput enhancements. Currently, we have no greenfield unit announcements but will add CapEx based on robust demand signals.
Q: What is the objective of the recent investment in Novonix?
A: Novonix is focused on developing advanced NMC cells and working with Koshinor for a factory in Slovakia. Our investment supports these projects and aligns with our technology and growth strategies.
Q: What is the current debt level, and how do you plan to fund the lithium-ion business?
A: We remain debt-free as of June. With an overall CapEx requirement of around 1,500-2,500 crores, we may need short-term debt this financial year and are working on long-term financing plans.
Q: How will the lead recycling plant benefit the company?
A: The plant will improve recovery rates and raw material security. It will meet about 30% of our overall lead requirement, enhancing compliance with battery management rules.
Q: Can you provide an update on the AGM batteries' performance and capacity?
A: We are seeing good traction for AGM batteries internationally and have introduced them domestically. The performance is satisfactory. The capacity is fungible with other battery types.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
