Release Date: February 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NDR Auto Components Ltd (BOM:543214, Financial) reported a 31.7% year-on-year increase in total revenue for Q3 FY '24, reaching INR 141.06 crores.
- EBITDA for Q3 FY '24 increased by 56.46% to INR 13.73 crores, with EBITDA margins improving to 9.73%.
- The company has been impaneled as a supplier to Hyundai Transys to supply seat trims to Kia, starting January 2025.
- NDR Auto Components Ltd (BOM:543214) entered into a technical assistance agreement with Hayashi Telempu for the supply of sunshades to Maruti Suzuki and Toyota Kirloskar Motor.
- Utilization rates at the company's facilities in Haryana, Bangalore, and Gujarat stood at 70% to 80%, indicating room for growth with existing capacities.
Negative Points
- The company experienced a quarter-on-quarter revenue decline from September to December, attributed to seasonal holidays and block shutdowns.
- Margins for the new Kia trims business are expected to be slightly lower than the company's current 10% margin.
- The company did not provide specific revenue mix details for the new initiatives during the call.
- There is a dependency on a single imported component for the sunshade product, which the company plans to localize in the future.
- The company's growth projections for the next fiscal year are expected to be in the low double digits, with significant growth anticipated only in FY '26-'27.
Q & A Highlights
Highlights from NDR Auto Components Ltd (BOM:543214) Q3 and 9 Months FY '24 Earnings Call
Q: Congratulations on the quarter as well as expanding both your product basket and clientele. Now first, a couple of questions on the 2 new initiatives you have announced. So on the sunshade side, just to kind of clarify, what's the exact product? This is the rear passenger the sunshade that is put in? Or what is this exact product?
A: So it's at the rear passenger. (Pranav Relan, Whole-Time Director)
Q: And with the INR 8 crores kind of investment that you're doing, what is the asset turnover in this line of business? So what is the revenue potential with the investment that you are doing?
A: So it's about INR 30 crores to INR 35 crores. (Pranav Relan, Whole-Time Director)
Q: And this order with -- for Hyundai Transys, this is only trims right now, right? This is not seat frames?
A: It's only trims right now. That's our first step into Transys. (Pranav Relan, Whole-Time Director)
Q: Sir, if you could give us an understanding how the revenue mix is likely to be post these 2 are into operations going ahead in terms of the current mix in the product profile and how are these 2 going to change?
A: So I don't have that off hand. We will share that with you after the call. (Pranav Relan, Whole-Time Director)
Q: And sir, as you mentioned about the sunshade part, in the entire ecosystem, how will the things work? The entire set will be prepared on a different line and we will be doing the installation work? Or how will this work?
A: So it's a completely new investment that we will do assembly at the moment and eventually, we will localize all the products in India. (Pranav Relan, Whole-Time Director)
Q: Sir, going ahead in terms of our main product line in terms of seats, are you expanding further? And also, are we engaging with other models -- preparing ourself for other models of Maruti going ahead? And any thought process on that?
A: So there's a new model that's coming in end of the year for Maruti. And in addition, we've got new business from Kia. (Pranav Relan, Whole-Time Director)
Q: And how the revenue mix will be looking? What kind of business is anticipated from Kia?
A: It's -- seat trims is from Kia. And for Maruti new model, it's frame and trim. (Pranav Relan, Whole-Time Director)
Q: Sir, if you could explain the share of profit of associates and the same from the joint ventures also? I think these are the equity stake that we have in the other company?
A: Associate is Bharat Seats. It is 28% or 29% if we consolidate. And joint venture is Toyo Seat. So that is -- I think that's minor. (Pranav Relan, Whole-Time Director)
Q: Sir, to pressing in the type of growth numbers, sir, if you could give us some color what's the likelihood next year? We are now only 1 to 1.5 months or -- in fact 2 months left for this year to end. So going into the next year, what would be the growth trigger? What should we investors look forward from the company?
A: So next year should be a stable year, maybe low double-digit growth. The year after is when our real order book and initiatives will kick in again. (Pranav Relan, Whole-Time Director)
Q: Okay. Sir, can you give some more color on when you were saying that our initiative will take into place, what will lead to that? Which initiatives are going to crystallize or materialize?
A: By January, we should have the Kia model -- the Kia launch in place, the shade business in place and some new Maruti models in place. So that should ramp up by maybe February or March. And then next year, that should come in play, the whole number. (Pranav Relan, Whole-Time Director)
Q: Correct. And sir, do we have any dividend distribution policy or what percentage of profits will be shared with investors?
A: So we're doing 10% at the moment. Of course, we see a lot of growth potential. (Pranav Relan, Whole-Time Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
