Release Date: May 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- India operations outperformed industry growth with over 14.5% growth in FY '24.
- Full year revenue reached INR75,519 million, with a 9.6% year-over-year growth.
- PBT margin improved by 300 basis points to 4.2% year-over-year.
- Net debt reduced to below INR10,000 million, improving the net debt-to-equity ratio to 0.63.
- Lifetime new business wins in FY '24 amounted to over INR87 billion, with 40% in the EV category.
Negative Points
- Overseas business was impacted due to a decline in 2-wheeler automotive sales and dependency on a single customer.
- Provision of INR160 million created for doubtful recovery of receivables from an EV customer.
- Interest costs remained similar to FY '23 despite a reduction in total debt.
- Increase in long-term debt from INR415 crore to INR651 crore, causing liquidity stress.
- Sharp increase in other expenses due to one-off provisions and write-offs.
Q & A Highlights
Q: Congratulations for a good set of numbers. My question was based on CapEx. If you could give us an idea of what kind of CapEx we're looking for, for FY '25, FY '26? And you have guided also this will be less than the depreciation. So if you could also give us some color on what the depreciation for us is going to look like? Is it going to be in this INR333, INR340 crores kind of range for the next couple of years?
A: Yes, Krishna. So like what we communicated earlier, we continue to keep CapEx in the range of about close to INR200 crores this year, most probably maybe around this level next year also or maybe slightly up, depending upon the requirement. But directionally, if you really see against our depreciation will up close to INR380 crores thereabouts. The CapEx spend going forward for the next 2 years also is going to be significantly lower only. So that should actually result in a gradual easing of depreciation build further. How much exactly it's difficult to compute or comment at this stage. But directionally, it should come down.
Q: Right. And another one would be on the interest cost situation. So where do we see in terms of debt repayment, what are we kind of looking to repay in the next couple of years? Will it be similar to last year? And what kind of interest costs are we're looking at? Can we get some idea on that as well?
A: Yes. Directionally, that should come down because we hope to generate a good amount of free cash flow this year and next year also, which should obviously go to repay the debt only. So our idea is to bring it significantly down to half of EBITDA, maybe by next year.
Q: And just a final one on these EV products that now make up 5% of our revenue. If you could tell us exactly what these products are and what sort of segmentation we should look at them as? And what kind of growth we're looking at here based on our order book?
A: So the -- so when we say 5%, that is the -- that is all products, whether EV powertrain products or engine-agnostic product that we supply into -- that we supply into EV models. In terms of the split in terms of what is engine-agnostic versus what is EV, I don't think we share that. But I think if you just look at the price points of the different product lines, the EV powertrain product will definitely make up a large portion of that.
Q: Congrats, sir for a good set of numbers. A couple of questions. One is in this lifetime order wins slide where in the very first chart, you have put FY '25, 8,500, FY '26, 14,500. So is that the ITL revenue situation in rupees, crore for those years as per the order book you received?
A: Yes. That's the additional revenue we are expecting from this order book for this year. And these numbers are in millions, not in crores.
Q: So which means, other than the organic growth of the business, which could have happened, this can be the additional revenue to that organic growth?
A: Correct.
Q: And second question, sir, in the reported number this quarter, your gross margin has jumped significantly sequentially or even compared to past many quarters. So did I miss out in your initial comments, anything there? Is this sustainable or just accounting change or one-off, how to look at it, sir?
A: Yes. So that's a good question. So what we would like to suggest here is maybe you should look at the full year gross margin improvement. I think you can still notice about 1.6% improvement there year-over-year. But out of that also, we have some of these one-timers, like the government incentive of last year, the last 2 years was accounted in 1 year. So there is 1 year extra benefit which we have taken. At the same time, there was certain other one-timers also, which we actually provided for on the cost side. So net-net, if you really see out of 1.5%, close to 1% improvement will continue going forward also is what we are estimating. The other remaining points, it could be because of all these other one-timers.
Q: So for this quarter, specifically, this 11.1% margin, how much would have been one-off?
A: My suggestion is, don't look at it on quarterly basis because there are several things which we accounted for on a full year basis also in terms of provisions and one-timers also. But directionally, we actually touched 10% on a full year basis. Out of that, close to about 0.5% to 0.6% could be because of these one-timers. The rest of it is the regular thing.
Q: Okay. Okay. So 10% reported full year, including 0.5 one-off. So directionally next year, one can expect it to operationally crossing double-digit revenue?
A: Yes, we don't want to give any guidance like that, but yes, our direction (inaudible).
Q: On the earlier question, you said CapEx outlook for FY '25 was what in absolute rupee terms?
A: Sorry, CapEx?
Q: CapEx plan for FY '25?
A: Yes. That would be close to INR200 crores.
Q: Sir, there are -- I have 2 set of questions. There has been increase in the long-term debt compared to last year. So why is that increase the long-term debt has increased by almost from INR415 crore to INR651 crores. So why is that increase?
A: Yes. So, basically, you should look at the total debt profile. So if you really see from, I think, INR1,635 crores or thereabouts, we brought it down to INR1,200 crores. If you really see last year's balance sheet, it was more of short term than long term, which was also creating significant stress on our liquidity also. And that included the NCDs, which we actually repaid earlier last year, that is in FY '24. So what we did was we replaced some of the short-term debt with long-term debt just so that the liquidity pressure eases out over a period of time. So -- but in terms of the total debt, there was
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
