Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Consolidated total net income grew by 15.9% year-over-year, reaching INR28,593 million.
- Consolidated EBITDA increased by 28.8%, with a margin of 14.3%.
- Profit after tax rose by 24.68%, amounting to INR2,038 million.
- No consolidated net debt, with net cash available of INR6,127 billion.
- Significant new business wins in India and Europe, including electric vehicle components and partnerships with major OEMs.
Negative Points
- Decline in four-wheeler segment revenue by 13% in FY24 and 3% in Q1 FY25.
- Challenges in the European market, including fixed costs from new plant setups affecting margins.
- Dependency on a few large customers, such as Hero MotoCorp, for significant portions of new business.
- Slow start in the EV market despite strategic acquisitions and investments.
- Increased competition and market challenges in the aluminum die-casting segment.
Q & A Highlights
Q: When we look at our India business for four wheelers, we are seeing some decline. Can you help us understand if there is any specific customer-specific issue? Also, what can be the proportion of four wheelers in our cumulative order book?
A: The decline in the four-wheeler business is mainly due to a slowdown in sales from Ford contracts in Europe. This has been the major reason for the decline. As for the cumulative order book, the four-wheeler business accounts for about 15% to 18% of the new order wins.
Q: What could be Endurance's content per vehicle in the Freedom 125?
A: Endurance is largely present in all product areas for the Freedom 125, making a significant contribution. However, specific figures cannot be disclosed.
Q: Regarding the forging business, what would be the split between internal consumption for backward integration and external sales? What is the peak revenue potential from this capacity?
A: The aluminum forging business is primarily set up for backward integration to support our inverted front forks and other products. Apart from a specific order from Jaguar and Range Rover, most of the capacity will be used internally. The peak revenue potential will be significant but is primarily aimed at sustaining and growing our inverted front fork business.
Q: Can you talk about the order wins and growth prospects in the aluminum die-casting business, especially for non-automotive and four-wheeler segments?
A: We are actively acquiring orders for both non-automotive and four-wheeler segments. Specific details will be shared in the next call, but we are highly focused on this area and expect significant growth in the coming years.
Q: Can you provide details on the content difference between a Battery Management System (BMS) and a Motor Control Unit (MCU) for Maxwell?
A: The MCU will be a profitable product for us, but the main business for Maxwell will continue to be the BMS. The total value of the MCU business is around INR340 million per annum, starting in February 2025.
Q: How has the European business performed, and what are the reasons for the strong growth in revenues?
A: The European business saw a 16.8% increase in revenues, primarily due to new business wins and tooling investments. The market grew by 4.1% in terms of registrations, and our performance was significantly better, reflecting our strong market position.
Q: What are the future growth prospects for the specialty plastic components business in Europe?
A: The specialty plastic components business is strategic for us, especially with the recent order win from Volkswagen. This opens up new opportunities for growth, and we are well-positioned to capitalize on this segment.
Q: How do you see the impact of the acquisition of the GM plant by Hyundai on your business?
A: The acquisition presents a good opportunity for us, especially since the plant is located near our existing facilities. We have the potential to add more components and expand our product offerings for Hyundai.
Q: What proportion of the total order book is in the aluminum die-casting business?
A: We will need to get back to you with specific figures, but the aluminum die-casting business is a significant part of our order book, with various new orders from customers like HMSI, Hero MotoCorp, and Royal Enfield.
Q: What are the margins and growth prospects for the four-wheeler segment, especially with the focus on aluminum die-casting?
A: The margins for the four-wheeler segment will be higher than our current margins. We are focusing on this segment to derisk from the two-wheeler industry and improve profit margins. This growth will come from both organic and inorganic opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
