Release Date: February 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- FIEM Industries Ltd (BOM:532768, Financial) reported a 10.3% increase in net sales to INR483 crores in Q3 FY2024.
- The company posted a strong 26% jump in PAT on a year-on-year basis to INR40 crores.
- The two-wheeler industry registered robust growth with a production volume of 5.5 million units in Q3 FY2024.
- FIEM Industries Ltd (BOM:532768) made a breakthrough in the four-wheeler passenger car segment, securing a supplier contract for full LED headlamps for a high-end European car.
- The company announced a bonus share in the ratio of 1:1 to reward shareholders, demonstrating a commitment to enhancing shareholder value.
Negative Points
- The EBITDA margin slightly decreased to 13.35% in Q3 FY2024 from 13.62% in the same quarter last year.
- The company faced a flat growth in the plastic products segment and a decline in the 'others' category, impacting overall sales performance.
- There was a significant increase in employee costs due to the expansion of the four-wheeler team and a temporary shutdown in December.
- The insurance claim process for the Sonepat power plant incident is still ongoing, with no updates on the settlement.
- Despite the growth in the two-wheeler industry, FIEM Industries Ltd (BOM:532768) did not outperform the industry as significantly as in previous years.
Q & A Highlights
Q: Congratulations, sir, for this new breakthrough in the four-wheeler segment. Can you talk more about this business, the technology spend required, expected margins, and CapEx for the four-wheeler business?
A: Thank you. This is a full LED headlamp involving the latest technology. We have created the necessary infrastructure, including a design office in Pune. Currently, no further CapEx is required for this business. The product is at the design and development stage, and we will update on margins in the future. Production will pick up in Q4 of the next financial year.
Q: Regarding the two-wheeler customer and sales, any new business picked up with Yamaha during the quarter?
A: Yes, there is an additional model, the ZXR, which has been converted for both domestic and export markets. We have been awarded four businesses for Yamaha, and we expect robust growth with several projects in the pipeline.
Q: What percentage of your industry order book is currently from LEDs, and what growth do you expect in the next one or two years?
A: Our LED share is currently 51%, up from 46-47% in the previous quarter. Most new orders are for LED products, and we expect this number to increase to 65-70% in the next two to three years.
Q: Can you provide an update on the Sonepat power plant and any capacity constraints affecting volumes?
A: Production resumed within three days, and restoration of all facilities is progressing quickly. There are no capacity constraints affecting volumes.
Q: What is causing the muted or degrowth in the plastic products and other segments?
A: The main product line is lighting, which has seen more growth. The flat growth in plastic products is partly due to the softening of raw material costs. We will focus more on these products in the future.
Q: Can you provide details on the size of the four-wheeler order and the major milestones for this segment?
A: We cannot disclose specific numbers at this moment. The important point is our entry into the four-wheeler segment with a high-end LED headlamp. We are creating the right infrastructure and are in final stages with Indian OEMs. The lead time for development is high, so we are not discussing numbers yet.
Q: What is the outlook for the next quarter and FY25?
A: H2 looks better, and we maintain an optimistic outlook for Q4. We expect the two-wheeler industry to grow well, and we should grow even better in FY25.
Q: What was the contribution from EV two-wheelers in Q3 revenue?
A: EV two-wheelers contributed 5.6% to the revenue in Q3.
Q: Can you provide details on the motor control unit product development and launch timeline?
A: We are already supplying SKD to Gogoro. Equipment is being transferred from Taiwan, and we expect to start domestic production by the first quarter of next year. We aim to localize more than 75% of the product.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
