Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue for Q1 FY25 increased by 22% year-on-year, driven by strong performance across OEM customers.
- EBITDA margin improved to 13.7%, reflecting robust operating performance.
- Net profit grew by 35%, showcasing strong execution capability.
- Opened a new R&D center in Japan, enhancing collaboration with Japanese customers.
- Successfully delivered the first project to Mercedes and received a second order, indicating progress in the passenger car segment.
Negative Points
- EV volume segment experienced moderate volumes during the quarter, indicating slower growth in this area.
- Frequent changes in government subsidies are causing challenges in the electric vehicle industry.
- High investment in new technologies and R&D may impact short-term profitability.
- The insurance claim process from a previous incident is still ongoing, with no immediate resolution in sight.
- Employee expenses have increased due to annual appraisals and new hiring, impacting overall cost structure.
Q & A Highlights
Q: Can you provide an update on the hub motor segment and the demand environment for Gogoro vehicles?
A: Gogoro is working on reducing the overall prices of their motorcycles and will launch a new generation two battery for both B2B and B2C segments. We expect volumes to start in FY25 and grow further by FY26. We have invested approximately INR35 crore in this segment.
Q: What is the outlook for the electric vehicle (EV) segment?
A: The current quarter has been subdued, but we expect long-term growth. The current penetration of EVs is under 5%, and we anticipate significant growth over the next three to four years despite challenges like changes in government subsidies.
Q: Are you supplying LED lamps for the new Royal Enfield Classic 350 model?
A: Yes, we are supplying fully LED lamps for the new Classic 350 model. This is a new order for us, and we were not supplying for the earlier halogen lamp models. This should be a significant revenue driver as it is a high-volume model.
Q: Can you provide details on the new TVS Apache RTR 310 model?
A: The Apache RTR 310 is a premium segment vehicle launched in India and globally. We are supplying LED lighting for this model, and we have been supplying for other Apache models as well.
Q: What is the status of your entry into the passenger car segment, specifically with Mercedes?
A: We successfully delivered our first project to Mercedes and received a second order for head and tail lamps for a new development project. We are also working on several RFQs from significant passenger car customers and have had successful audits and approvals of our manufacturing facilities.
Q: What are your plans for the new R&D center in Japan?
A: The new R&D center in Japan will enable closer collaboration with Japanese customers like Honda, Yamaha, and Suzuki. This will strengthen our design capabilities and help develop new products for the global market.
Q: What is the expected CapEx for this year and the next two to three years?
A: We plan to spend around INR100 crore this year and approximately INR250 crore over the next two to three years. This will be a combination of capacity expansion and development, including a new factory for four-wheelers.
Q: What is the status of the insurance claim related to the fire incident?
A: The insurance claim is under process, and we expect it to take some time. The policy is on a reinstatement basis, and we are progressing quickly with the reinstatement of assets and construction of the building.
Q: What are your expectations for revenue growth in FY25?
A: We are optimistic about the outlook for FY25, expecting a growth rate of 15-20%. The strong performance of our key customers like HMSI and TVS, along with new model launches, supports this positive outlook.
Q: What is the potential revenue contribution from the four-wheeler segment in the next five years?
A: Currently, the four-wheeler segment contributes less than 1% of our revenue. Our goal is to significantly increase this contribution to double digits over the next five years.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
