Import note from Delhivery CEO on quick commerce and why it will have huge challenges sustaining the current growth rate once the $40-50 million monthly burn reduces

An interesting read on how Tanishq created awareness and shift from Unorganized to Organized in Gold Jewellery retailing

After some more reading and speaking to some-people involved in the value chain, the understanding I have is that:

1. There is a tech-edge and barriers to entry when it comes to the Auto business (as there is a long approval process and products are also more sophisticated)
2. Same true for their bimetal business esp when they are supplying to the likes of Scheider etc
   Though, when it comes to enery meters (and smart meters) it seems that there could be some local competition that may emerge. Also companies might still import from China as it works out to be cheaper even after duties.

Would be keen to gather thoughts from others on these.

• 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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