Release Date: May 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Consolidated revenue grew by 19% in Q4 FY24, driven by a 19% increase in lead-acid battery revenues and a 30% growth in the new energy business.
- Domestic and international volumes for four-wheeler and two-wheeler batteries saw significant growth, with domestic volumes up 16% and international volumes up 30%.
- The new energy business, including battery packs for telecom and three-wheeler applications, grew by over 30%.
- The company has successfully integrated its plastic component business, contributing to an EBITDA increment of about 0.8%.
- Amara Raja Energy & Mobility Ltd (BOM:500008, Financial) has expanded its market leadership in international markets, including Southeast Asia, the Middle East, and Africa.
Negative Points
- Inverter battery segment experienced a decline due to a fire accident at the factory last year.
- One-time expenses of about INR20 crores were incurred for stamp duty payments related to a merger transaction.
- Trading activity in inverter batteries negatively impacted operating margins, with trading revenue percentage increasing from 5% to 10%-11%.
- The company faces challenges in the telecom segment of its industrial business, with growth limited to 6%-7%.
- Lead prices have increased by 10%, which may impact margins if not offset by pricing actions.
Q & A Highlights
Q: Could you please repeat the growth rates for the four-wheeler and two-wheeler replacement on OEMs for this quarter?
A: For the quarter, the four-wheeler aftermarket growth rate is around 15%, whereas the two-wheeler was around 18% to 19%. The OEM growth in four-wheeler was about 2%, whereas in the two-wheeler, we have seen a growth of about 15%. - Y. Delli Babu, CFO
Q: What would be the mix of auto and industrial revenues now?
A: It's more or less the same, about 70/30. There is no change. - Y. Delli Babu, CFO
Q: Could you comment on the growth rate for the industrials? What kind of growth rates are we seeing and what is the outlook going ahead?
A: We are consistently seeing a 6% to 7% kind of growth on an overall basis in industrial. While we are seeing some conversion in the telecom side of the business, considering other opportunities in both domestic and export markets, industrial business will continue to grow around that 6% to 7% kind of number. - Y. Delli Babu, CFO
Q: Could you help us understand if there is any seasonality in the new energy business?
A: In the new energy business, except parts depending on the OEMs' requirements, there will be some modulations. But otherwise, we have not seen any major seasonality as such. The EV uptake sometimes depends on subsidies and supply chain challenges, but there is no seasonal factor. - Y. Delli Babu, CFO
Q: What are your expectations from a partner in the new energy business?
A: We look for a partner that has relevant technology today and a pipeline of products for the next five to eight years, robust supply chain linkages, and manufacturing know-how. This would help us with customer credibility, especially in the automotive sector. - Vikramadithya Gourineni, Executive Director - New Energy Business
Q: Are we looking for a partnership beyond the current joint development for the 2170 project?
A: Yes, we are looking for a more encompassing partnership for a larger portfolio of cells across chemistries to cater to a larger part of the market. - Vikramadithya Gourineni, Executive Director - New Energy Business
Q: Can you provide an update on the cell manufacturing capacity and CapEx plans?
A: The first giga factory is expected to commence sometime in FY26. For FY25, we may need to spend close to INR1,500 crores between both lead acid and new energy, with lead acid requiring about INR300 crores to INR400 crores and new energy about INR1,000 crores to INR1,100 crores. - Y. Delli Babu, CFO
Q: What is the status of the insurance payments received for the plant fire incident?
A: The fixed assets and inventory lost due to the fire are transferred to claims receivable. Any claim received from the insurance company offsets that. The actual claims collected will be based on the reinstatement value. - Y. Delli Babu, CFO
Q: Can you indicate the customer qualification process for the lithium cell manufacturing facility?
A: The customer qualification plant is under construction, and discussions with OEMs are ongoing. We are not in a position to name any OEMs at this time. - Y. Delli Babu, CFO
Q: What is the expected revenue target for the lubricant business in FY25?
A: The target for the year will be in excess of INR150 crores. - Harshavardhana Gourineni, Executive Director - Automotive and Industrial
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
