Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenues increased by 24% year-on-year to INR 357 crores, driven by higher demand for Industrial Switchgear and Wire & Cable businesses.
- Export revenue share grew by nearly 37% year-on-year, contributing to 26% of total revenue.
- EBITDA excluding other income grew by 28% year-on-year to INR 33 crores, with an EBITDA margin increase of 34 basis points to 9%.
- Profit after tax grew by 45% year-on-year to INR 15 crores.
- The Switchgear division, contributing 52% of total revenues, saw a 26% year-on-year growth with an EBITDA margin improvement of 160 basis points.
Negative Points
- The Building Products division, contributing only 5% to revenues, is facing challenges due to higher sales outstanding and team reorganization.
- Resistance to Smart Meters in some areas and potential delays in installation by AMISPs could pose challenges.
- The cost of manufacturing in the planned Saudi Arabia subsidiary is expected to be higher, potentially affecting margins.
- The Wire & Cable business, despite contributing 43% to revenues, has an EBITDA margin of only 5%, indicating lower profitability.
- The company is still in the development and testing stage for EV Chargers, with no significant updates or progress reported.
Q & A Highlights
Q: I would like to have any update on the EV Charger manufacturing. Are we in any discussions with customers regarding this supply of EV Chargers?
A: As of now, there is no significant improvement in the status from the last quarter. The EV Chargers are still in the development and testing stage. However, our subsidiary, Kaycee Industries, has invested and taken a 30% stake in a fast charger manufacturing company in Hyderabad.
Q: Regarding Smart Meters, are we planning to participate in tenders directly?
A: Our focus right now is to secure orders for our Smart Meter factory and prove our quality to customers. However, we are open to participating in tenders if opportunities arise. We are currently in discussions with large AMISPs including Adani, GMR, and NCC.
Q: Will the Saudi Arabia plant affect margins due to higher manufacturing costs?
A: While manufacturing costs in Saudi Arabia will be higher, the local content regulations in Saudi Arabia create a demand for locally made products. We are testing the market to see if we can gain a first-mover advantage.
Q: What will be the working capital requirements for the Smart Meter business?
A: We expect the net working capital days for Smart Meters to be much lower than our current business, with debtor days not exceeding 45 days and inventory around 60 days, totaling approximately 70-75 days.
Q: When do you expect revenue to start from Smart Meters, and what margins are anticipated?
A: Revenue from Smart Meters should start in the second half of this year, with an expected INR 200 crores in revenue. Next year, at full capacity, we aim for INR 1,000 crores in revenue with an EBITDA margin of around 14%.
Q: What is the total CapEx outlay for FY25?
A: The total CapEx for FY25 will be close to INR 50 crores, including INR 25 crores already invested in the Smart Meter factory and an additional INR 20 crores for other CapEx.
Q: How is the product mix expected to change going forward?
A: This year, we expect the product mix to be 53-55% for Industrial Switchgears and 40-43% for Wire & Cable. Any additional revenue from Smart Meters will be incremental.
Q: What are the synergies achieved from the Kaycee Industries acquisition?
A: We have achieved significant synergies, reflected in improved margins for both Kaycee and Salzer's Rotary Switch business. The process is ongoing, but we have met many of our initial goals.
Q: What is the rationale behind investing in a Hyderabad-based fast charger manufacturing company through Kaycee Industries?
A: The startup offers different technology and complements our existing efforts. Given the challenges with our current collaborator, this investment allows us to stay in the EV charger market with diversified technology.
Q: What is the expected CapEx for the wholly-owned subsidiary in Saudi Arabia?
A: We are planning an initial investment of around INR 10 crores.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
