Q2 FY 24 Short Notes:

Product Mix:

Driver Information and Connected Vehicle Solutions (DICVS)- 65%

Actuation Control and Fluid Management Systems (35%)

ACFMS is mostly towards export so slightly higher Margin.

But DICVS Margins are also improving as electronics prices have Stabilized. From average Value of Rs 300 per DIS now we are in the range of Rs 1200 but going forward it will be around 2500 in next 3 years.

In DICVS Segment 65% revenues comes from Two wheelers, 20% from Commercial vehicles and rest from Passenger Vehicles.

Revenue growth during this Quarter is slightly less mainly due to less EV sales due to FAME subsidy issue. Now EV again started to pickup from October. EV Vehicles form 8% of the sales by Volume and slightly more by Value.

In the Two-wheeler segment 8 out of 10 TFTs were manufactured by Pricol. In Four-wheelers we didn’t start early due to non-compete clause which ended only in 2020. So, now only we are starting in Four-wheeler segment.

In The ACFMS we have moved from low value products like oil pumps and chain tensioners to BLDC fuel pump and electric coolant pump. This has increased the average selling price from Rs150-200 to more than Rs 1000.

Revenue Guidance of 3800 crore to 4000 crore by FY26 maintained.

Revenues from Joint Ventures like Sibros and BMS power Safe will start from FY26.

EBITDA Margins of 13.5% will be achieved much before FY26 with sequential improvement of 0.3 to 0.4 in every Quarter.

Capex Plan:

Out of the total 600 crores Capex plan, 150 crores spent on last year, 200 crores is being spent this year and remaining 200 crores to be spent next year for modernization which will help in making revenue in the range of Rs 3800 to 4000 crores.

Disclosure: Invested and Biased.

Hi @Anubhav_Garg Thanks for the kind words. I agree hotel sector does indeed seem to have a lot going for it and many of the factors seem structural in nature, so unlikely to reverse anytime soon. If the current trends continue for the next ten years, growth can continue for the next ten years. You don’t need any “new” triggers. Risks mainly are from geopolitics – war, terrorism, civil disturbance etc or a macro economic black swan event like covid, demonetization or a severe macroeconomic mismanagement by populist politicians. None of these risks should be completely written off IMHO. But my main grouse with hotel stocks is with valuations. I was late to the party and am still unable to understand how to value them, so my allocation remains low. Whether to exit or hold on – you seem to have got in at the right moment, so actually I should be asking you for advice and not the other way round!

Hey, any update on your views here? Q2 results were good.

Current numbers look good but I had few questions on margins and working capital front:
1) If we see current numbers the margin expansion has been mainly due to increase in gross margins and for that management has a say that raw material prices have gone down but if we see COGS breakup cost of material consumed has gone down marginally about 0.6% Y-o-Y H1 basis and 0.3% Y-o-Y quarterly basis major impact has been majorly due to very high negative changes in inventories decreasing COGS so I’m unable to get that since management has a say that current margins are going to be stable so, wanted better colour on this
Is there anything I’m missing would appreciate your views

2) Another thing is since company is shifting more and more towards branded sales and B2C segment which requires higher inventories generally and also current H1 inventory as a % of revenue is up 4% has management provided any guidance on this side

3) and last thing on debtor days, current H1 debtor as a % has increased by 9% and management is saying it is on a declining trend when an investor brought up this during concall their say was that in different geographies there are different credit periods but it is on declining trend. I was unable to understand this since both the comments are bit contradictory to each other am I missing out on something over here what are your all comments on this

If I calculated correctly, based on these numbers, not only has BEC revenue gone up YoY, but Avg Rs/sqft/month has jumped from Rs. 277 to Rs. 322 YoY.

That’s strong pricing power, and no sign of any market share loss that was expressed as a concern here earlier.

Discl.: Invested