Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue increased to INR1,205 crores from INR1,044 crores in Q1 FY24.
- EBITDA per wheel improved slightly to INR257 from INR253 in the same quarter last year.
- Debt reduced by approximately INR82 crores from Q4 FY24.
- Secured long-term agreements in the tractor business, expecting over 10% growth for FY25.
- New business line in aluminum knuckles expected to generate additional revenue from Q3 onwards.
Negative Points
- Export revenue declined to INR123 crores from INR154 crores in Q1 FY24.
- Profit after tax remained largely flat despite increased finance costs and depreciation.
- Export volumes declined due to supply chain disruptions and rising global inflation.
- Concerns about lower-than-expected margins in the PV business, though resolution is underway.
- High finance costs, with Q1 financial cost hovering around INR31 crores.
Q & A Highlights
Q: Can you explain the significant drop in market share in the PV segment?
A: The market share drop in the PV segment is due to strategic decisions to exit low-margin, age-old product lines. We are comfortable with the current 37%-38% market share and are focusing on profitable business and export opportunities. (Unidentified Company Representative)
Q: What are the reasons behind the decline in export growth, and when can we expect a recovery?
A: The decline is due to logistical challenges and a slowdown in the US market. We expect a recovery in the next three quarters as logistical issues resolve and US market demand picks up. (Aditya Dixit, President of Export Division)
Q: Can you provide an update on the capacity expansion, particularly for alloy wheels?
A: The capacity expansion for alloy wheels is progressing well. We are moving from 3.6 lakh wheels per month to 4 lakh wheels per month by the end of the financial year. (Unidentified Company Representative)
Q: How do you view the impact of Chinese EV manufacturers on your export market?
A: We do not see a significant impact from Chinese EV manufacturers. The market is large, and we are strategically placed with American and European OEMs. We expect duties and market dynamics to limit Chinese influence. (Aditya Dixit, President of Export Division)
Q: What is the status of your entry into the OTR segment?
A: We are making gradual progress in the OTR segment, focusing on products that can be produced from existing production lines. We have entered new business areas like irrigation, skid-steer, and compact tractors. (Unidentified Company Representative)
Q: Can you provide guidance on EBITDA per wheel and the impact of new product lines like aluminum knuckles?
A: We expect EBITDA per wheel to be between INR255 to INR260 for the year. The aluminum knuckles will start contributing from Q3, but their impact on EBITDA per wheel will be minimal initially. (Pranav Jain, Deputy General Manager Finance)
Q: What are the key factors affecting your export growth, and how do you plan to address them?
A: Export growth is affected by geopolitical issues and logistical challenges. We are confident in our competitive positioning and expect exports to contribute significantly to our revenue in the coming years. (Mohan Joshi, Executive Director)
Q: What is your CapEx guidance for this year and next year?
A: This year's CapEx will be around INR210 crores to INR220 crores, mainly for nickel and alloy wheel expansion. Next year's CapEx is expected to be lower, around INR70 crores to INR80 crores, mainly for maintenance and incremental capacity. (Mohan Joshi, Executive Director)
Q: How do you plan to manage your debt levels going forward?
A: Our peak debt was INR1,050 crores last year, and we are now on a reduction path. We expect finance costs to come down as we reduce our debt levels. (Pranav Jain, Deputy General Manager Finance)
Q: What are your growth expectations for the steel and aluminum wheel segments this year?
A: We expect 6%-7% growth in the steel wheel segment and 12%-15% growth in the aluminum wheel segment, driven by both domestic and export markets. (Mohan Joshi, Executive Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
