CONFERENCE CALL - from Capital Markets
EBITDA margins are sustainable
The company held its conference call on 8th February 2016 to discuss results for December 2015 quarter.
Sunil Pahilajani MD and CEO addressed the call
Highlights of the call:
Sales for the December 2015 quarter stood at Rs 406 crore against Rs 431 crore.
EBITDA was Rs 67 crore against Rs 51 crore, up 31%.
PBT before EO was Rs 68crore against Rs 44 crore.
In the weak market scenario where revenue growth is challenging, the company has continued its focus on margin enhancement.
It has sharply improved its EBITDA margins from 12% to 17%.
On the recent development around tightening of emission norms the management said that as an engine manufacturer, it is their prerogative to support OEMs with emission complaint engines and maintain preparedness for any changes in emission regime.
Greaves is ready for proposed nationwide implementation of BSVI norms for 4-wheelers and for 3-wheelers in 2017.
For the proposed advancement of BSVI, the company has accelerated its plans and initiated discussions with OEMs as well as its partner network of suppliers and technology specialists and is confident of achieving BSVI with a cost effective solution.
The company sustains leadership through seven manufacturing units
The company is one of the leading engineering companies in India with core competencies in diesel /petrol engines, farm equipment and gensets.
The economy continues to be subdued.
The company has maintained market share in key products.
The company has been able to maintain focus on new product development, new customers and new geographies.
The company has reduced its cost which is sustainable.
The company has 53 OEMs as its clients.
During the quarter 3 wheeler volume is 80000 against 85000 y-o-y. For nine months it was 230000 against 245000
During the quarter 4-wheeler volume is 7000 against 10000 y-o-y. for the nine month it was 25000 versus 31000.
During the quarter pumps volume was 29000 same y-o-y.
The commodity benefits have been passed to the OEMs. But value addition and other benefits remain with the company.
Genset volume grew 4% to 460. Volumes in genset business have grown above industry as genset industry has not grown much and the company is a small players in that basket.
The company will soon launch 250 KVL engines in the next quarter.
The EBITDA margins are sustainable.
The company has already provided for the retrospective bonus for the employee in December 2015 quarter.
The company sold 500 tillers during the quarter same as last quarter.
After market growth was 7-8% during the quarter largely led by auto business.
After market accounts for 18-20% of sales.
The company has around Rs 500 crore of cash.
Exports accounts for 4% of sales.
Out of the agri sales, half comes from the pumps business.
Urilisation was 70%.
The company does not foresee any growth in volumes as OEMs are not seeing any uptick in demand.
Volumes in BSIV will go up sharply next year.
The company will give an idea on capex at the year end.