Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Talbros Automotive Components Ltd (BOM:505160, Financial) reported a 13% YoY growth in total revenue for Q1 FY25, reaching INR209 crores.
- EBITDA for Q1 FY25 increased by 24% YoY to INR35 crores, with an improved EBITDA margin of 16.5%.
- The company received new multiyear orders worth INR1,000 crores from a leading European OEM through its joint venture, Magneti Marelli Talbros Chassis Systems Private Limited.
- Export sales reached 27% of total turnover, the highest ever for the company.
- The company is focusing on cost optimization and a good product mix, which has led to improved margins and profitability.
Negative Points
- Demand for commercial vehicles was sluggish during the last quarter, affecting overall growth.
- Employee expenses increased significantly due to a 10% salary hike and a one-time performance incentive expense.
- There was a slight reduction in gross margin from 56% to 53%, attributed to product mix and pending price increases.
- The tractor segment saw a decline in growth compared to the previous year.
- The company faces challenges with volatile exchange rates affecting import costs, particularly in the gasket and Marugo divisions.
Q & A Highlights
Q: Sir, if you can highlight on the employee expenses side that has increased significantly in this quarter. And also on the EV side, what our future expectation is. We have an increase targeting a certain increase in the revenue mix. So if you can highlight on the new products that we started supplying and also our future expectation from these products?
A: (Navin Juneja, Non-Executive Non-Independent Director) Yeah. First, I will talk about the salary increase. As you are aware, at the end of every financial year, the increase is being due to the employees. We have given 10% salary increase. And in this quarter, one-time expense of incentive -- performance incentive, which is about INR70 lakhs to INR80 lakhs has also been debited. So this is one time. It will -- in the subsequent quarter, it will not be there. So that is the reason for salary increase. It happens first quarter of every year if they achieve the target.
Now second, about the EV, we acquired points because of the EV, and we have received these very, very decent orders from EV segment. In fact, if you see in the last year, last year, my EV contribution was 3% of our total revenue. In this quarter, we have achieved 3.3%. Going forward, we are committed to achieve a target of 12% of our total revenue and orders are in hand, some are going to come in next three months.
But some EV launches are being delayed by three to six months. So the effect, you can't -- you will see for a period of time, we will definitely see the effect. It will grow, definitely grow. Orders are there. In fact, we are closing some very big new orders also on that. But I think we'll give you news some time in October on that.
Q: Sir, questions from my side. What is the -- what is the CV segment as a percentage of our revenue? How much it contributes?
A: (Navin Juneja, Non-Executive Non-Independent Director) About 23%.
Q: And how much of -- how much was the reduction in this quarter, as you said that the demand was sluggish?
A: (Navin Juneja, Non-Executive Non-Independent Director) There was no reduction, but the growth was not bad because we supplied some new parts also. There was no reduction, I think. So let me go through the detail also on the total front also just a minute. Let me go to a pie chart.
Anuj Talwar - (Joint Managing Director, Executive Non-Independent Director) A slight increase only in our accounting about CV. Actually, what came down was the tractor segment.
Navin Juneja - (Non-Executive Non-Independent Director) Tractor was okay.
Anuj Talwar - (Joint Managing Director, Executive Non-Independent Director) It came down from last year.
Navin Juneja - (Non-Executive Non-Independent Director) Last year, little bit.
Anuj Talwar - (Joint Managing Director, Executive Non-Independent Director) Tractor will now pick up this year. So there's no reduction. We have lost no --
Navin Juneja - (Non-Executive Non-Independent Director) But the growth we are expecting was not there. That is wrong with it.
Q: Sir, my first question is, what is the status with the M&M as of now? As in last quarter, you had mentioned you are developing some heat shields for them?
A: (Navin Juneja, Non-Executive Non-Independent Director) Mahindra & Mahindra?
Q: Yes, correct.
A: (Navin Juneja, Non-Executive Non-Independent Director) Yes, already, I think the plant has started the -- soft launch has been started for the plant. And we have set up a new plant for that, in Chakan area of Pune. Plant has started the production for -- I think, the small batches have started. I think the major impetus will come from the September onwards, you can see the major commercial will take place. Already order was received. We are getting new orders. It is under -- dies have been made, development is going on, going on there. It's going on.
Q: Congratulations on the numbers. My first question is Marugo Talbros saw growth of about 21% in revenues and 42% in EBITDA. Could you elaborate on what were the utilization levels like, was it some operating leverage at play? And is this growth something that we can target going forward as well?
A: (Navin Juneja, Non-Executive Non-Independent Director) You're talking about Marugo. Okay. Marugo is basically primarily, I think, 75% to 80% is a supplier to Maruti, okay, for anti-vibration and the hoses. And I think this year, we will -- our growth will be around 15% because the Maruti projections are based -- we are basically on Maruti only. And of course, there is EBITDA improvement, which you can see going forward. I just mentioned in the brief call that there was a price increase pending.
Now we have received that also. So the -- at the end of six months, you can see a substantial EBITDA improvement. And going forward, it should be a double-digit EBITDA for us. And we are adding some new products, the effect of which you can see in next year, not this year.
Q: I just have one question. Can you provide details of the order book under each segment? And what is the expected timeline to complete these orders?
A: (Anuj Talwar, Joint Managing Director, Executive Non-Independent Director) That will be very different --
Navin Juneja - (Non-Executive Non-Independent Director) At present, I can send it to you through [Devan] our IR adviser, but at present it's not ready with me -- readily available with me.
Anuj Talwar - (Joint Managing Director, Executive Non-Independent Director) These orders are across segments, across product lines, across divisions, so very difficult to decipher it on the call, but we can ask SGA to send it to you.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
