Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rico Auto Industries Ltd (BOM:520008, Financial) reported a 7% growth in the second quarter, surpassing their initial flat growth expectation.
- The company has successfully compensated for a 15-16% decline in exports by increasing domestic sales, gaining over 152 crores in the domestic market.
- Rico Auto Industries Ltd is optimistic about achieving better profits by the end of the year, with expectations to surpass last year's profits.
- The company is expanding its domestic market share by increasing its supply percentages to major clients like Maruti and Hero.
- Rico Auto Industries Ltd is actively pursuing new opportunities in the electric vehicle market, including discussions with companies like Tesla and Lucid.
Negative Points
- Exports have been negatively impacted by geopolitical tensions, resulting in a 15-16% decline compared to the previous quarter.
- The commercial vehicle segment remains under stress, with growth dependent on future infrastructure investments.
- The defense segment, while promising, faces delays in payment cycles, affecting cash flow despite full billing.
- The company has faced challenges in achieving its long-term revenue and margin targets, with current margins hovering around 10%.
- There is uncertainty regarding the sale of land assets, with current offers not meeting the company's valuation expectations.
Q & A Highlights
Q: Can you provide an update on the defense side revenue and payment status?
A: Arvind Kapur, Chairman CEO and MD: We expect to generate around 35 crores in this quarter from defense, with production underway. Payments are structured with 80% on delivery and the remaining after inspection, typically taking 3-4 months. We anticipate receiving payments within this financial year.
Q: Are there any developments with new electric vehicle customers like Tesla or Lucid?
A: Arvind Kapur, Chairman CEO and MD: We are in discussions with Lucid and have visited Tesla. We are actively engaging with all major electric vehicle manufacturers, including Toyota and Maruti Suzuki, to expand our market presence.
Q: What are the expected revenues from domestic and export markets for Q3 FY25 and the full year?
A: Arvind Kapur, Chairman CEO and MD: We anticipate domestic revenues to reach over 2,100 crores and exports around 375 crores for the full year.
Q: How do you see the company's revenue and margin growth over the next few years?
A: Arvind Kapur, Chairman CEO and MD: We aim to achieve 11% margins this year, with a target of 13% in the near future. We expect revenue growth of 12% annually, with a goal of reaching 5,000 crores by 2029-30, driven by both domestic and export markets.
Q: Are there any plans to sell land, and what is the expected valuation?
A: Arvind Kapur, Chairman CEO and MD: Currently, there are no immediate plans to sell the land. We are looking for a valuation of around 1,000 crores, which we believe is fair given the market conditions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
