Hello Community,
I’d like to share some key insights from the Annual Report 2024, Q1 FY25 Results, and the recent AGM:
Global Presence: The company operates with 10 manufacturing facilities, 4 R&D centers, 3 engineering capability centers, 1 tool & die shop, 8 warehouses, and over 4,600 employees across the USA, Europe (Germany, Mexico, Belgium, Serbia), China, and India.
Product Development: Out of 18 products, 6 are still under development.
Working Capital Lenders: HDFC, SBI, CITI, and Yes Bank are represented as working capital lenders.
IP Achievements: The company filed 11 patents and 10 design applications and was granted registration for 13 patents and 15 designs during the year.
Order Book: The total net order book stands at ₹23,300 crore after consuming ₹400 crore in Q1 FY25 and adding ₹1,100 crore in new orders. This represents 7.3x FY24 revenue.
Revenue Distribution: As of Q1 FY25, 33% of product revenues come from the battery electric vehicle (BEV) segment, with 72% of sales directed to international markets. North America accounts for 43% of total sales.
Growth in BEV Revenue: While the company has a diversified revenue base across geographies, products, vehicle segments, and customers, the growing share of BEV revenue remains a dominant theme.
Decline in ICE Revenue: Revenue from internal combustion engine (ICE) products has shrunk to 9%.
Revenue Composition: 33% of revenue comes from BEV, 21% from hybrids, and 37% from power source-agnostic products.
New Business Wins: The company secured its first product order for its Sensors and Software business, which will be executed by NOVELIC. Additionally, more products were added to an existing Driveline order. This quarter, the company added one new customer and one new program in Asia.
EV Programs: Currently, there are 55 EV programs across 31 customers, with 27 in production, 12 fully ramped up, and 15 in various stages of ramp-up. Another 28 programs are slated to start production over the next few years.
New Commercialized Products: In Q1, the company launched two products: In-cabin Sensors (ACAM: a critical safety feature to detect the presence of a child in the vehicle) and Park Gear (enhancing the safety and reliability of commercial EVs).
Future Product Additions: Two new products were added to the technology roadmap: an Integrated HV Motor Controller, which improves thermal management and reduces energy losses, and an Integrated Hub Motor Controller, which combines the controller and motor to reduce weight and wiring complexity, enhancing system reliability for compact and lightweight EVs.
Upcoming Developments: The company plans to introduce low-voltage and high-power-density motor solutions between CY24 and CY25.
PLI Benefits: Four products have been approved for Production-Linked Incentive (PLI) benefits, with revenue recognition starting in the next financial year.
Board Composition: No significant concerns were identified regarding board composition or related party transactions. Meeting attendance is strong, and board member salaries align with industry standards and regulations. The company does not have any material subsidiaries.
Subsidiary Support: The company has provided a letter of undertaking to its subsidiary, Comstar Automotive Hong Kong Limited, to offer financial support as needed from April 1, 2024, to March 31, 2025.
Legal Matters: Labor cases are pending before the High Court and the Labor Commissioner. Legal advice indicates these cases are unsustainable, and no provisions have been made. No monetary claims are pending.
Contingent Liabilities: The total disputed amount is ₹99.48 million (31st March 2023: ₹85.88 million), with ₹8.63 million already provided for, and the remaining amount disclosed as a contingent liability.
Warranty Provision: At the consolidated level, the warranty provision increased to ₹45.12 million from ₹20.04 million in the previous year. I’m unclear if this increase is due to higher sales or changes in customer contracts, but the amount remains small compared to the company’s overall revenues.
Overall, this is a solid business with capable management. However, the company is facing softened growth in the European market. Rising commodity prices, high interest rates, and increased fuel costs may act as headwinds.
Disclaimer: I am invested with a tracking portion and may accumulate on dips, so biased.
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