Q1 FY 24 Concall Notes:
1.FY 26 Revenue Guidance-
~Revenue- 4000 Cr ( 3600 Organic +400 inorganic)
~Organic Capacity- 4200 Cr
~ Capacity utilisation-85% (3600/4200)
~Revenue growth will be evenly spread over FY 24-26 period ± 5%.
~ Confirmed LOI showing the visibility for 3600 crores based on that they are building capacities.
~ 3 Drivers for growth
- New product replacing existing products which reaching end of their life cycle
- premiumization of existing products
- new product launches or new business with customers or product segments that they have not entered into (disc brakes)
~Assumed very conservative market growth rate
2.Margin
~Long term sustainable EBITDA margin is 13.5-14%.
~Over the next few quarters they will reach there and stabilize at that level.
~Raw material prices will ease and come back to normalcy by September 2023.
3.Capex
~600 Cr (Organic-400, Inorganic-200) for 10-12 Quarter out of which 3 is done.
~Organic capex will be almost equally distributed over 10-12 Quarter ( Around 35-40 Cr/Quarter)
~ With 200 Organic Cr Capex they can reach to 3600 Cr revenue but by investing 400 Cr they are building capacities for 4000-4200 Cr revenue.
~Mostly will be funded through internal accrual
4.Export
~Vision and desire is to get to 20% of revenue being export driven
~As on date it is 10%.
~ Management has accepted that this is one area where they have failed to achieve their set target.
~They are looking at filling the balance inorganically
5.R&D
~Will Continue to spend between 4 to 4.4% of our revenue on R&D
~It divide into two categories product development and process development
~ Out of 900 white collar employees, 440 are dedicated to R&D.
~This gives them an edge over many of our companies,helps them to lead over competition and continue to keep ahead of the technology curve.
6.New Launches /Technical Collaboration
~They aspire to get also into industrial information systems by way of gauges through inorganic means if the right target comes by.
~BMS & Sibros
- Products are ready in both the cases
- Just started the roadshows for the customer
- 2 Quarters from now they will have much better visibility.
- Expecting it to kick in only after FY26 with very minimal numbers taken for even FY26.
- It is not going to be very material in the next few years for our revenue guidance 3600 crores
~E-cockpit
- It is currently under development with certain OEMs
- will be launching it maybe in the next three to four quarters from now.
~Non Automotive Information Systems Space
~They have all the technologies required to enter that space.
~ They don’t have distribution network/warehouse required for selling
~ They are trying to enter it through inorganic.
7.EV
~Company growth will be the same as EV sector.
~Margin will be the same as non EV.
~ They are engaging with almost all the EV players of the repute scale and size of the business both conventional OEM and the new OEM development.
~They are barring Ola for strategic reasons
8.On MINDA
~Madras High Court has not dismissed the case, only the injunction has been lifted,the Court asking CCI to revert with their observation.
~Company has taken all measures to ensure that legally they are protected and stand in control of the company.
9. DIS Largest Player
~They are 2nd largest player in the world in Two-wheeler DIS. The largest player is Nippon Seiki currently driven by Honda which is one of the largest Two-Wheeler makers in the world.
Disc- Invested since a year. No buy or sell recommendations
