RACL Geartech Limited

• RACL Geartech Limited held its Q4 FY2023-24 earnings conference call on June 21, 2024

• Completed shift of Noida plant to a larger 32,000 sq ft facility without production loss

• Investing in Project Titan to become a Tier 1 supplier for a premium German car manufacturer

• Creating buffer capacity in gear grinding to avoid previous year’s constraints

• Focusing on growing domestic business to improve working capital cycle

• Continued focus on exports (73% of revenue) despite longer working capital cycles

• Investing ahead of demand for future projects like electric vehicles

• Adding new customers every 2-3 years to supplement organic growth

• Growing opportunities in passenger vehicles and commercial vehicles segments

• Shift of manufacturing from Europe to India by global players like ZF

• Some weakness in European demand and inventory corrections

• Challenges in availability of skilled manpower

Revenue Growth and Margins:

• FY24 revenue of ₹423 crores, up 15% YoY

• EBITDA margin of 24.09% in FY24, slightly down from 24.69% in FY23

• Targeting revenue of ₹550 crores for FY25, implying 30% YoY growth

• Working capital cycle: Management stated higher cycle is factored into product costing

• Dividend policy: Small dividend maintained for investor sentiment despite growth phase

• Capacity constraints: New investments made to create buffer capacity

• Revenue target of ₹550 crores for FY25

• EBITDA margin guidance of 20-23% range as business scales up

• Capex plan of ₹60 crores for FY25

• Focus on reducing long-term debt in FY25

• Capex of ₹60 crores planned, substantial portion for Project Titan

• Opportunities in passenger and commercial vehicle segments

• Risk of continued working capital pressure due to export focus
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