Racl -Update

Racl -Future growth(2024-july+sept)

PERFORMANCE
26% CAGR GROWTH in last 2 yrs

1…TVS
=Recently the new electric scooter launched by TVS a couple of days back which is an extensive scooter, RACL is the single sole supplier for their entire rear axel assembly and many other things.

2…Super bike
=One more major super bike is being launched maybe in September for which the entire transmission is being supplied by RACL.

3…Cars
=Until FY2020, the company was zero is passenger car vehicle and last year it was 6% and this year it will be more than 10%. RACL is into passenger cars like BMW 7 series, Porsche, Mercedes AMG, BMW X7, Aston Martin. The kind of precautions and stringent requirements are a lot in these segments.

4…Yokes
Developing Yokes for motorcycle. The rear wheel will be driven by the propellers instead of a routine chain

=Bagged order from an European Two Wheeler manufacturer for supplying finishd forgings Yoke’s. This is a new business line. In past, RACL has never supplied parts till Forging stage

=At present none of the Yokes are used in Motorcycles in India. These are very high end Yokes being used in European 2 wheelers

5…ZF
=SOP for two new ZF business for started in June 2023. ZF dedicated plant running at 95% Utilisation. Project volume has peaked 2 years before anticipated projections

6…Company likely to win one big project in a new segment. Details to be known by next Qtr

7…Capex

=New Shakti plant was inaugurated in March 2023. The plant has been commissioned and commercial production has started for few projects

=Capex projection for FY-24 to 27 at 250 cr

= The company has projected capital expenditure of ~Rs.61 crore for FY24 (refers to the period from April 01, 2023 to March 31, 2024) for the purpose of creating capacities for existing products alongside new customers and modernization/upgradation of existing plant and machinery.

=No investment is made by the company unless the company gets a nomination letter from the customer

8…Intend to keep growing the company at > 20 pc CAGR for the foreseeable future

9…Others

=Received best supplier award for 100% Delivery by Kubota India in for CY 22

=Gajraula Plant is TISAX & ISO 27000 certified. Probably one of the first few in India for a company of our size.

=Moving from lose component manufacturer to highly precisioned oriented manufacturer.
-The more complex the part is, the more margin RACL is able to command

Disc…invested

Concall Highlights:
This year is likely to be better then last year, last year was best.
Subsidiaries around the world start contributing and it likely to continue.
It is not flash in the pan quarter, trend should be similar for 24 months. Enough demand and factors to suggest company arrived at different level of fundamental strength.
Debt reduction is not flash pan, Debt is keep in check. Rating is AA, stable. Among the best rated in peers.
Most diversified portfolio in world, for pipes and tubes segment.
Have some value added products.
Single SAP platform across the world.
Demand:
Oil and gas, jal jivan plan, defense, nuclear, power, sugar etc. supply to all industries.
3rd and 4th quarters have more revenue. Exports will remain between 30 to 40% of order book.
EBIDTA increased from 11 to 16% from last year.
Pipe demands to grow at 10% to 15%. There is space for new players.

Order book:
1.4 billion $ and keep at this level, it is sweet spot for company. Do not do trading. With sales funnel, growth will be achieved by replenishing orders quickly. Moving to value added products due to less competition, vendor qualification is hard for quality.
Capacity:
Pipes 2.5 million Tons in domestic, Pellets 1.7 million Tons, Abdu Dhabi 300K Tons.
Hunter JV: Waiting for API license, expected by Dec 2023. the JV will be break even.
started trails. Not in production. Very High margin and premium products. Satwana running at 60 to 70%, it will be increase by 20 to 25% by adding balancing. Next year it will be at 80%.

Cash:
Not looking for major capex, M&A. Cash generated will be conserved, shared with share holder, to reduce debt. Will use in working capital so debt will reduce.

War:
Abu Dhabi facility do not see any slowdown, exports 33 countries in MENA region. War do not have any impact as of now, if it get contained.
Due to Ukraine-Russia war, Europe looks at India for pipe supply. As Ukraine can not supply.

Coking Coal:
Price increased from 230$ to 340$ in last two months.
Mitigation: Movement of price is not sharp, not likely to be volatile. Learning from past experience, try to hedge and add price variation clause with governments. Lot of contracts succeeded. Technology modification, adding PCI will reduce cost.

https://www.jindalsaw.com/audio/MFG0220231027149594.mp3

Disclosure: Invested

Hello, anyone tracking… Numbers are good all time high revenue , ebidta… stock price all time high 1500+ current price 755… why stock has not cheer up sep numbers… anything missing ?

Folks, I have a question for guys who are tracking green hydrogen sector closely.

How realistic and feasible is technology currently to use seawater (instead of pure water) in hydrogen electrolysis? Is it commercially viable?