Precision Camshafts Q2 FY23 Con call Imp points:
• EMOS- 55.98 CR income- continues to face headwinds due to short supply of constraints, looking to add additional manpower for this division
• Standalone business EBITDA margins have reduced from 20+ % to 15-16%- Mainly due to commodity price increase & higher export realisation component in previous qtrs.- sustainable is close to 20-25% once short-term issue resolves
• Have started supplying braking systems from standalone non camshaft business – this non camshaft revenue component is expected to pick up in coming times
• Confident of EMOSS – as have strong order book visibility extending up to FY24- problems faced are component shortage or postpone of delivery, though there is no cancellation
• ELCV conversion of diesel vehicle to E-vehicle is in sub 4MT category- it’s a value proposition for buyer as there is 70-80% saving on operations & thus break even cost for customer for electrifying vehicle is 2 years post which savings add to his cashflow.
• Will do conversion for first few years directly rather than distribution as it’s a niche technology as of now
• Vehicle certification is left, post which commercialisation opportunities will start – expectation is early next year
• Working on even non engine components in standalone business, apart from braking, details of which cannot be shared as of now- however will re-emphasise that camshaft business still is getting lot of traction
• Standalone business sees very strong order book for 5 years
• For machine camshaft is at 85% capacity utilisation & 75% for cast camshaft division. Will need additional capex if order book further increases & generally capex to revenue is 1:1 ration in our business. Maximum should be at low 90 levels for both the divisions before new capex is to be evaluated. Not looking at expansion as of now.
• Alpha between export & domestic business is 5-7% (exports being higher)
• Solar power plant will be commissioned in next 2 months most likely (10-15cr annual saving expected from this)
• Looking at quite a few strategies like multi sourcing components, setting some supplies in India to counter uncertainties in Europe, however Macro environment there is still eveloving, leading to order execution delays
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