Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rane Engine Valve Ltd (BOM:532988, Financial) reported an improvement in EBITDA margin by 145 basis points, supported by cost-saving initiatives.
- The company won orders worth 170 crores during the quarter, indicating strong order booking.
- Rane Engine Valve Ltd's occupant safety division saw a revenue growth of 28% compared to the previous year's quarter.
- The company is enhancing its international aftermarket business, with strong orders from the US and other regions.
- Rane Engine Valve Ltd is optimistic about future growth, expecting a double-digit CAGR over the next five years.
Negative Points
- The company's aggregate sales decreased by 4% year-on-year, with a 3% decline in revenue from Indian OE customers.
- Revenue from international customers decreased by 10%, primarily due to the divestment of the LMC business.
- The commercial vehicle segment continued to decline, affecting the company's performance.
- Rane Engine Valve Ltd faced challenges in the passenger vehicle segment due to subdued consumer sentiment and high inventory levels.
- The company's EBITDA margin was impacted by unfavorable mix and drop in volumes in certain segments.
Q & A Highlights
Q: What is the reason for the decline in profit from the joint venture with ZF, and how do you see it going forward?
A: The decline is due to increased interest and depreciation costs, particularly from the acquisition of the steering wheel business. The margins have started to improve due to backward integration projects, and we expect this trend to continue as production ramps up. (Harish Lakshman, President)
Q: Can you explain the impact of the recent acquisition of the steering wheel business on the financials?
A: The acquisition contributed a revenue of about 45 crores and an EBITDA of 2.5 crores for the quarter. However, it incurred losses at the net level due to high interest and depreciation costs. (Harish Lakshman, President)
Q: What are the benefits of the merger between Rane Engine Valve, Rane Brake Lining, and Rane Madras for shareholders?
A: The merger will create a larger entity with improved scale, access to new markets, and enhanced export capabilities. It will also enable cost savings and operational efficiencies. We expect significant debt reduction post-merger, which will strengthen the balance sheet. (Harish Lakshman, President)
Q: What is the outlook for Rane Engine Valve's performance, and are there any one-off items in the recent results?
A: The recent performance included a one-off price recovery of 4 crores. We are confident of achieving a 10% EBITDA margin in the near future, supported by market recovery and operational improvements. (Harish Lakshman, President)
Q: Can you provide details on the CapEx plans for the group and the focus areas for investment?
A: We have a three-year CapEx plan of approximately 1,000 crores, with 45% allocated to ZF Rane for capacity expansion and capability enhancement. The remaining will be invested in Rane Madras and Rane Engine Valve for growth and modernization. (Harish Lakshman, President)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
