Investor presentation Feb 2024- Key takeaways
Q3FY24 Takeaways:
Despite being a sluggish quarter, the company reported highest ever Q3FY24 revenues (up 27% at Rs 713 cr) and EBITDA. The growth was broad based across all the segments- Auto ICE, Auto-Tech Agnostic & xEV, and Non-Auto. Net profit for the quarter was up 55% at Rs 48.4 cr.
The Auto-ICE segment is benefiting from the premiumization play in the auto industry with higher content per vehicle. In fact, SEL witnessed highest ever quarterly revenues in the 2W-Motorcycles segment primarily on account of premiumization.
In terms of sub segments in the Auto ICE category, revenue mix stood at 36% (Motorcycles), 6% (Scooters), 23% (PV) and 10% (CV).
In terms of geographies, domestic revenues (69% of sales) were up 27%, while international business (31% of sales) grew at a higher pace of 32%.
For 9mFY24, revenues and profits were higher by 20% and 25% at Rs 2066 cr and Rs 141 cr respectively. In terms of revenue mix, Auto-ICE segment accounted for 76%, Auto Tech agnostic- 7%, xEV- 5% and non-auto- 12%.
It continues to see higher business from new customers and expects the growth momentum to continue with an order book for new business at Rs. 2 bn, which is spread across segments. It received incremental orders of Rs 700 cr in 9mFY24 and its order book as on Dec 2023 stood at Rs 2040 cr (Domestic 41% and global 59%).
It has a wide portfolio of products across 80+ product categories catering to 96 auto and non-auto customers across 27 countries.
The electric mobility segment (xEV), SEL is witnessing strong growth. Revenues jumped from Rs 7.2 cr in FY22 to Rs 82 cr in FY23. For 9mFY24, sales stood at Rs 88 cr. It has 16 clients in this segment (10-2w, 4-PV, 2-CV). Net debt as on Dec-23 stood at Rs. 6.2 bn (Net debt/Equity -0.47), ROCE-16.6%, ROE-14.4%.
It has 17 manufacturing facilities (including 1 in Sweden) and a team of over 500 engineers. Its technology strength lies in the manufacturing of complex and critical precision forged and machined components which enables it to cater to global OEM’s. In the non-auto segment, it has its focus set on Aerospace and Defence segments.
SEL has a strong track record of growth. During FY13 to FY23, revenues grew 16% CAGR, while the growth in PAT was higher at 20%. Going forward, the company intends to change its revenues mix to 60% (currently 76%) from Auto-ICE segment, 20% from Auto-Tech agnostic segment and xEV segment (currently 12%) and 20% from Non-Auto segments (currently 12%).
As a strategy, SEL aims to consolidate and increase its market share in the Auto ICE segment. For the Auto- Tech agnostic and xEV segment, it plans to further strengthen its foothold in the business and leverage its existing capabilities in select product segments like aluminum forged components. Through its non-auto business, it plans to diversify into other categories with a view to increase its addressable market. It is also open to the idea of exploring inorganic growth opportunities.
Key demand drivers/trends in the Auto ICE segment:
-Faster engine upgrades
-China + 1 theme
-High focus on light weighting
Key strengths in non-auto segments:
-Strong relationship with top aerospace OEMs as well as with their Tier 1 Suppliers
-Multiple growth opportunities in Defense driven by Government’s thrust on Atmanirbhar Bharat
- Large order wins in Aerospace vertical
FY23 revenues-Rs 92 cr. At full capacity utilization- revenue potential of Rs 350 cr.
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