Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sansera Engineering Ltd (BOM:543358, Financial) reported a 10% year-on-year increase in revenue, reaching INR7,634 million, with improved EBITDA margins at 17.4%.
- The company completed a Qualified Institutional Placement (QIP) of INR12,000 million, significantly strengthening its balance sheet and providing financial flexibility for future growth.
- The tech-agnostic and HCV business sectors experienced robust growth of 55% year-on-year, driven by ramp-up order execution for a large North American-based EV customer.
- Sansera Engineering Ltd (BOM:543358) has entered into a strategic MOU with Dynamatic Technologies to produce high-friction parts for Airbus A220 aircraft door assemblies, potentially expanding its aerospace business.
- The company's order book as of September 2024 stood at over INR20 billion, with 60% of orders from international markets, indicating strong demand across sectors.
Negative Points
- The non-auto sector saw a 20% year-on-year decline, primarily due to weak performance in the off-road and agriculture business segments.
- The aerospace business faced headwinds due to delays in order execution from a large customer, impacting overall performance.
- The passenger vehicle (PV) business experienced an 8% year-on-year decline, attributed to slowness in the export market.
- Interest costs increased sequentially due to higher debt and the discontinuation of interest suspension on export credit, although this is expected to improve with debt repayment.
- The Swedish facility reported an EBITDA of only 6.7% for Q2, with expectations to reach double-digit margins by the end of the next year.
Q & A Highlights
Q: Can you provide more details on the recent expansion of the order book, particularly in the non-auto segment?
A: The order book has expanded significantly, with over 50% coming from non-auto, tech-agnostic, and HCV sectors. Specifically, INR500 crores are from non-auto, with aerospace contributing 37%, agriculture 4%, and a new entry into the semiconductor equipment sector making up 55% of the non-auto order book. - B. R. Preetham, Group CEO
Q: What are the strategic plans for the recently raised funds, and are there any plans for M&A or geographic expansion?
A: The funds will primarily be used to repay debt, making us mostly debt-free. We are expanding our manufacturing capabilities, including acquiring 55 acres of land for future growth and setting up a special process plant for aerospace. We are also considering a small assembly plant in the US and exploring opportunities in aluminum forging. - B. R. Preetham, Group CEO
Q: What is the outlook for margins, and what initiatives are being taken to improve them?
A: Margin improvement will come from product diversification, cost control measures, and efficiency projects. We expect higher capacity utilization and volume expansion to contribute positively. However, these initiatives will take some time to fully materialize. - Vikas Goel, CFO
Q: How is the aerospace and defense segment performing, and what is the revenue outlook?
A: The aerospace and defense order book has expanded, and we expect to achieve our targets despite external challenges. We anticipate a 40% to 50% CAGR in this sector over the next two to three years, with current orders close to INR325 crores to INR350 crores. - B. R. Preetham, Group CEO
Q: Can you elaborate on the semiconductor equipment order and its potential impact?
A: The semiconductor equipment order is recurring and represents a significant opportunity for us. We are establishing specialized facilities to support this sector, which should enhance our standing and open up further opportunities. - B. R. Preetham, Group CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
