Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- UNO Minda Ltd (BOM:532539, Financial) delivered a strong financial performance in Q1 FY25 with consolidated operating revenues surging by 23% year-on-year to INR3,818 crores.
- EBITDA for the quarter reached INR408 crores, reflecting a 24% year-on-year increase, with EBITDA margins in line with the previous year's Q1.
- The company maintained its margin guidance of 11% plus or minus 50 basis points, with a bias towards the upper range.
- UNO Minda Ltd (BOM:532539) has secured new partnerships and joint ventures, including a TLA with Suzhou Inovance Automotive for high-voltage EV products and a TLA with Aisin Corporation for sunroof manufacturing.
- The company is expanding its product portfolio and capabilities, with significant growth in segments like lighting, alloy wheels, switches, sensors, and controllers.
Negative Points
- Finance costs for the quarter increased to INR36 crores due to higher borrowings to fund CapEx, land acquisitions, and working capital.
- The commercial vehicle sector experienced flat production volumes due to a slowdown in public and private CapEx, impacting the company's growth in this segment.
- The e-two-wheeler registration declined by 40% quarter-on-quarter and 17% year-on-year, largely due to a reduction in subsidies, which could exert pressure on the cost structure.
- The seating business showed flat revenues compared to the corresponding quarter last year, with growth restrained by declines in commercial vehicle production volumes and subdued export markets.
- The company's European operations, particularly in the acoustic segment, faced challenges due to lower volumes, impacting overall performance.
Q & A Highlights
Q: My first question is on the Suzhou Inovance partnership. For EVs being manufactured, e-four-wheelers being manufactured in India at this point, are all of these components being imported? Or is there any domestic player at this point? And what is the potential kit value if you were to sell all of these products into a customer?
A: In terms of current market domestically, it is less than 100,000 cars last year, so these things are largely imported. With this partnership, we will be able to localize these parts. The potential kit value ranges broadly between INR1.5 lakh to INR2 lakh for these products.
Q: My second question is related to the sunroof partnership with Aisin. What is the current penetration of sunroofs in India, and what is the potential kit value around Sunroof?
A: The current penetration of Sunroof is almost 25%. The kit value ranges because there are various types of sunroofs. For the large sunroof with single glass opening, the kit value is somewhere between INR25,000 and INR30,000.
Q: Does Uno Minda have any exposure to hybrids?
A: Yes, we already have some products going into current hybrids being manufactured domestically. These products are agnostic to the engine type.
Q: Can you share some timelines and investments for the Inovance JV?
A: The team is working on a detailed project report, and we should have clarity on investments within the next month. We are targeting to get government approvals in around four months. Production timelines will be clearer once the project report is approved by the Board.
Q: On the sunroof investment, is this just for one OEM, or do you plan to scale it up?
A: The initial investment of INR63 crores is primarily for the business we have already secured. As we get more business, we will seek incremental investment from the Board.
Q: On the seating business, do you still maintain the target of INR1,500 crores in a couple of years?
A: Yes, we are still holding on to our target of doubling the revenue to INR1,500 crores over five years. We are working internally to meet this target.
Q: For the Inovance JV, do you have some soft understanding with OEMs before starting the project?
A: We are in discussion with some customers, but we would like to have some sort of direction from our customers before committing CapEx.
Q: Are the four projects coming on stream in FY25 still on track despite some delays?
A: Yes, the projects are progressing as planned, and we expect them to be operationalized in FY25.
Q: Why was the EV order book not provided this time?
A: Initially, we provided it to address skepticism about securing business. Now that we have established a track record, we decided to do away with it due to volume uncertainties.
Q: What are the revenue or market share targets for the Aisin sunroof and Suzhou Inovance businesses over the medium to long term?
A: Our target is to reach 30% of the domestic share of business in the medium term. We expect these projects to deliver average margins in the third full year of operations.
Q: What is the current import share for sunroofs, and what is the potential revenue timeline for EVs crossing INR1,000 crores and INR3,000 crores?
A: We will get back to you on the current import share for sunroofs. We expect to cross INR1,000 crores in EV revenue in the next 12 months and hit INR3,000 crores soon after the Inovance business comes on board.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
