Release Date: August 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Standalone revenue for the quarter increased to INR1,960 crores from INR1,780 crores in the same period the previous year.
- Consolidated revenue for the quarter rose to INR4,434 crores from INR3,767 crores in the corresponding quarter.
- CG Power, in which the company holds a 58% stake, saw a significant revenue increase to INR2,228 crores from INR1,874 crores.
- Shanthi Gears registered a revenue increase to INR139 crores from INR121 crores, with a profit increase to INR29 crores from INR24 crores.
- The company is making good progress in the electric vehicle segment, with plans to launch new products and expand dealer networks.
Negative Points
- Return on Invested Capital (ROIC) annualized dropped to 47% from 56% in the same period the previous year.
- Free cash flow for the quarter decreased to INR42 crores from INR97 crores in the same period the previous year.
- Metal formed products saw a decline in PBIT to INR36 crores from INR44 crores in the corresponding quarter of the previous year.
- Mobility revenue for the quarter slightly decreased to INR181 crores from INR187 crores in the corresponding quarter the previous year.
- The company faces challenges in the electronics and lens business, struggling to break into the Chinese-controlled supply chain.
Q & A Highlights
Highlights of Tube Investments of India Ltd (BOM:540762, Financial) Q1 FY25 Earnings Call
Q: Despite strong manufacturing activities in India, why is the growth in segments like engineering, metal-formed products, and gear segments nearly in single digits? What new initiatives are being taken to increase growth?
A: (Vellayan Subbiah, Executive Vice Chairman) The performance is in line with or better than the market. There was a slowdown in passenger and commercial vehicles, but two-wheelers saw a revival. New growth verticals include exports and electric vehicles (EVs). The railway initiative under CG is also growing well.
Q: What is the update on the launch of large commercial vehicles and electric tractors? How is the electric three-wheeler performing in North India?
A: (Unidentified Corporate Representative) The electric three-wheeler is gaining market share in North India, with around 70 dealers currently and plans to expand to 150 by year-end. The heavy commercial vehicle segment will see new product launches around September-October, aiming for a 20% market share.
Q: Why are we not seeing significant growth in new initiatives like the lens business and medical devices?
A: (Mukesh Ahuja, Managing Director) The medical business is growing well, with new product development and a greenfield plant in Noida. The lens business is in the approval phase with customers, but progress is slow.
Q: How are exports trending, and what is the level of exports in the standalone business?
A: (Mukesh Ahuja, Managing Director) Exports contribute about 19% of revenues in the engineering division and 14.6% overall. There are challenges on the freight side, but exports are generally stable.
Q: What is your aspirational market share across the EV portfolio in the medium to long term?
A: (Vellayan Subbiah, Executive Vice Chairman) We aim to be in the top two players in at least two to three segments, targeting a 20-25% market share in each segment.
Q: What are the levers to reduce manufacturing costs in the heavy commercial vehicle segment over the next one to two years?
A: (Vellayan Subbiah, Executive Vice Chairman) Key drivers include indigenizing the supply chain, developing in-house control units, and packing our own batteries. These initiatives should significantly reduce costs.
Q: Can you provide an update on the medical devices greenfield project in Noida?
A: (Mukesh Ahuja, Managing Director) The land acquisition is in process, and commercial production is expected to start by Q2 of next year. The focus will be on medical consumables.
Q: How is the mobility business performing, particularly the electric three-wheelers and trucks?
A: (Vellayan Subbiah, Executive Vice Chairman) The three-wheeler segment is performing well, especially in South India. The heavy truck segment is also gaining traction, with significant orders from customers.
Q: What is the status of the large diameter tubes capacity expansion?
A: (Mukesh Ahuja, Managing Director) The expansion is expected to be completed in H2. Current capacity utilization is around 85-90%, which will come down to 70% post-expansion, providing room for future growth.
Q: What is the game plan for TI 2 and TI 3 initiatives?
A: (Vellayan Subbiah, Executive Vice Chairman) TI 2 will focus on electric vehicles, medical devices, and CDMO. TI 3 will look for value buys in a distressed market. Capital allocation will primarily go towards TI Medical and new growth segments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
