RACL Geartech –

Q2 FY 24 highlights –

Sales @ 103 vs 90 cr
EBITDA @ 25 vs 23 cr ( up 9 pc, Margins at healthy 23 pc )
PAT @ 10 vs 10 cr

Product range –

Transmission gears and Shafts, Sub assemblies
Precision Machined parts
Chasis parts
Industrial gears

Product applications –

2, 3 Wheelers, TVs, CVs, Agri eqpt and industrial gears

Manufacturing facilities – 02
Warehouses – 03 in Europe

Comments from Concall –

Expanding Noida facility with additional leasehold area of 26k sq ft. Commercial production to start from Q1, FY 24. Samples shall be produced in Q4 this yr

Nominated for supply for gearboxes and shafts for a German electric- bicycle player. To be made at the new expanded facility. These are premium bikes costing around 5-7k Euros. These kind of bikes are gaining huge popularity in Europe. The German customer has a patent protected technology for this bike.

Nominated for supply of wheel axle for KTM Austria for their 1300 cc super bike

Another customer of the company – MAN Trucks had some of its projects delayed in the current FY. Company supplies transmission gears and axle shafts to them. By Q4, supplies to MAN trucks should begin. Supplies to MAN should be a big growth driver in FY 25

For FY 24, growth guidance has been moderated to 15-20 pc from earlier guidance of 25 pc. Should go back to 25 pc kind of growth rates wef FY 25. Reason for the same is because the company could not get its hands on gear-grinding machinery ( very high end machinery ) due various supply bottlenecks and shortages in Europe and Japan from where they r imported. Most of the issues now stand resolved

In FY 24 – company is expected to spend 80 cr on Capex. FY 25’s capex plan has not yet been finalised

The newer orders that company is getting have greater degree of value add. Hence there is an upward bias in gross margins

Company’s supplies to BMW’s R-1200
( upgraded now to R-1250 Bikes ) is a high margin, high value addition business. Its likely to continue that way till 2033 !!!

KTM has expanded into China and is doing good business there as well. RACL remains their supplier even for the bikes to be sold in China. This should help RACL grow with KTM

Still aim to hit the Rs 500 cr topline by FY 25 end while maintaining the same margins

The China + 1 sentiment and the high inflation and energy prices in Europe have been a tailwind for the company and other Indian manufacturing companies too

Disc: holding, biased, not SEBI registered

RACL Geartech –

Q2 FY 24 highlights –

Sales @ 103 vs 90 cr
EBITDA @ 25 vs 23 cr ( up 9 pc, Margins at healthy 23 pc )
PAT @ 10 vs 10 cr

Product range –

Transmission gears and Shafts, Sub assemblies
Precision Machined parts
Chasis parts
Industrial gears

Product applications –

2, 3 Wheelers, TVs, CVs, Agri eqpt and industrial gears

Manufacturing facilities – 02
Warehouses – 03 in Europe

Comments from Concall –

Expanding Noida facility with additional leasehold area of 26k sq ft. Commercial production to start from Q1, FY 24. Samples shall be produced in Q4 this yr

Nominated for supply for gearboxes and shafts for a German electric- bicycle player. To be made at the new expanded facility. These are premium bikes costing around 5-7k Euros. These kind of bikes are gaining huge popularity in Europe. The German customer has a patent protected technology for this bike.

Nominated for supply of wheel axle for KTM Austria for their 1300 cc super bike

Another customer of the company – MAN Trucks had some of its projects delayed in the current FY. Company supplies transmission gears and axle shafts to them. By Q4, supplies to MAN trucks should begin. Supplies to MAN should be a big growth driver in FY 25

For FY 24, growth guidance has been moderated to 15-20 pc from earlier guidance of 25 pc. Should go back to 25 pc kind of growth rates wef FY 25. Reason for the same is because the company could not get its hands on gear-grinding machinery ( very high end machinery ) due various supply bottlenecks and shortages in Europe and Japan from where they r imported. Most of the issues now stand resolved

In FY 24 – company is expected to spend 80 cr on Capex. FY 25’s capex plan has not yet been finalised

The newer orders that company is getting have greater degree of value add. Hence there is an upward bias in gross margins

Company’s supplies to BMW’s R-1200
( upgraded now to R-1250 Bikes ) is a high margin, high value addition business. Its likely to continue that way till 2033 !!!

KTM has expanded into China and is doing good business there as well. RACL remains their supplier even for the bikes to be sold in China. This should help RACL grow with KTM

Still aim to hit the Rs 500 cr topline by FY 25 end while maintaining the same margins

The China + 1 sentiment and the high inflation and energy prices in Europe have been a tailwind for the company and other Indian manufacturing companies too

Disc: holding, biased, not SEBI registered

Same here. Couldn’t agree more

The attached news is very interesting. Seems like more buying to come in next few days.