Release Date: August 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Precision Camshafts Ltd (BOM:539636, Financial) reported a noticeable growth in net profit, reaching INR 18 crores, up from INR 15 crores in the previous quarter.
- The company's subsidiary, MEMCO, showed significant improvement with a total income of INR 12.8 crores and a net profit of INR 55 lakhs.
- EMOSS, the e-mobility subsidiary, saw an increase in revenue to INR 46 crores from INR 31 crores in the previous quarter.
- The company has started commercial deployment of electric LCVs in the Indian market, with confirmed orders from large pan-India customers.
- Precision Camshafts Ltd (BOM:539636) achieved an EBITDA margin of 18.8% and a PAT margin of 10.5% for the quarter.
Negative Points
- The e-mobility subsidiary, EMOSS, continues to face challenges due to geopolitical instability and a recessionary environment in Europe.
- The company did not provide specific forward-looking numbers for the growth rate of the domestic camshafts business.
- There are ongoing challenges in the regulatory and logistical processes for retrofitting vehicles, which vary by state and city.
- The company has significant cash reserves but did not provide clear plans for capital return activities such as buybacks or increased dividends.
- The EBITDA figures for subsidiaries MFT and EMOSS were not clearly mentioned in the investor presentation, causing some confusion among analysts.
Q & A Highlights
Precision Camshafts Ltd (BOM:539636) Q1 FY 2025 Earnings Call Highlights
Q: Can you share an update on the domestic EV retrofitment business and the demand outlook for this financial year and the next?
A: We have started commercial sales of retrofitment for large pan-India operators in the e-commerce, logistics, and waste collection segments. We are seeing good off-take and have started delivering vehicles in various parts of the country. It's too early to provide specific numbers on the order pipeline, but the momentum is positive. As for launching as an OEM, it is a couple of years away due to the significant development and testing required.
Q: What is your outlook for the EMOSS business, and are we seeing demand conditions turn around in Europe?
A: The situation remains sluggish due to economic conditions in Europe. Customers have not canceled orders but are delaying decisions. It is hard to predict when we will come out of this downturn.
Q: How about the demand outlook for the domestic camshafts business? At what rate can it grow this year and the next?
A: We have a significant market share in India and are mostly a single source for many large OEMs. The growth of our customers will directly correlate to our growth. Additionally, we have won new business from Indian OEMs who were previously importing parts. We are setting up new facilities to meet this demand, which will start in late 2024-25 and continue into the next year.
Q: Are the retrofitment vehicles being retrofitted at your factory in Solapur, or do you have setups in other locations like Delhi?
A: Currently, all retrofitment is done in Pune or Solapur. We will consider expanding to other locations once we achieve significant volume. We have identified partners for local execution if needed.
Q: What is the payback time for the investment in retrofit vehicles?
A: The payback time is about two years.
Q: Are you planning any capital activities like buybacks or increasing promoter stakes given the cash on the balance sheet?
A: We are focusing on expanding the camshaft business and setting up new plants. We have other opportunities we are looking at, so I will not comment on buybacks at this time. If there is something in the pipeline, we will share it with shareholders.
Q: Can you provide the EBITDA contribution of MFT and EMOSS?
A: The exact EBITDA details are shared in the investor presentation. If you need further details, please write to us, and we will provide the information.
Q: How do you recognize revenue for retrofitment vehicles?
A: Revenue is recognized when the vehicle is taken into custody by the customer and leaves our plant. We typically wait for all formalities to be completed before invoicing.
Q: Any plans to take the EMOSS technology to other countries with better economic conditions?
A: We are looking at North America seriously and actively. Each country has its own regulations, requiring local manufacturing and certification. We are also exploring new countries within Europe.
Q: What is the CapEx planned for FY '25 and '26?
A: For the camshaft business, we have planned maintenance CapEx of INR 3-5 crores and major CapEx of INR 70-80 crores for new assembled camshaft machining lines. There are no specific CapEx plans for '26 at this point.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
