Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue grew by 6% YoY to INR4,106 crores.
- EBITDA increased by 23% YoY to INR759 crores.
- PBT saw a significant growth of 30% YoY to INR469 crores.
- EBITDA margins improved by 260 basis points to 18.5%.
- Secured new business worth INR980 crores across various sectors.
Negative Points
- Weak demand environment in Europe impacting operations.
- U.S. operations still posted an EBITDA loss of INR23 crores.
- Utilization in U.S. aluminum operations was low at 50%.
- Decline in PV business offsetting gains in oil and gas exports.
- Challenges in logistics and freight costs impacting margins.
Q & A Highlights
Q: We saw very strong performance in the Defense business. Can you talk about the areas where new orders have been won and the ramp-up timeline?
A: Our goal was to achieve 50% growth in Defense this year. Orders are across vehicles, artillery, and MRO items. We expect to exceed 50% growth for the year and maintain profitability.
Q: What is the outlook for the CV segment in the US and India, given recent data showing weakness?
A: The US business remains stable despite a decline in incoming orders. In India, we expect the CV segment to be flat, plus or minus 5% for the year. We anticipate a heavier Q3 and Q4.
Q: Can you provide an update on the ATAGS artillery order and its potential impact?
A: The ATAGS order is close to finalization, expected by the end of August. The current order is for 307 guns, valued at over INR4,000 crores. India needs around 4,000 guns, presenting significant potential.
Q: How is the company addressing the slowdown in export revenue and the potential impact of a US recession?
A: We focus on having a strong balance sheet, best technology, and cost structure. This allows us to support customers in reducing costs during tough times, ensuring we remain competitive.
Q: What are the plans for the INR2,000 crores fundraise?
A: The fundraise is for growth-oriented deployment in India, focusing on both greenfield and inorganic opportunities to expand our manufacturing footprint for global and Indian markets.
Q: Can you elaborate on the pricing actions in the European aluminum operations?
A: Pricing actions will be fully implemented by next quarter. This will stabilize and improve our European operations' profitability.
Q: What is the status of the VRS in Mundhwa and its expected impact?
A: We aim to modernize the Mundhwa plant and improve productivity. This involves reducing the workforce through VRS and retirements, targeting a few hundred reductions over the next couple of years.
Q: How is the company managing the impact of increased freight costs and availability issues?
A: We have mitigated most of the freight cost increases for this quarter through structural adjustments and customer negotiations. We continue to manage these challenges effectively.
Q: What is the capacity utilization at the overseas subsidiaries?
A: In Europe, utilization is about 70%, and in the US, it is around 30%.
Q: How will the new government approvals for KSSL affect the company's operations?
A: The approvals transfer existing defense licenses from Bharat Forge to KSSL, consolidating our defense business under KSSL. The new plant will start operations around October-November, post-Diwali.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
