Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Strong volume growth of 8.58% year over year, increasing from 548 metric tons in Q1 FY24 to 595 metric tons in Q1 FY25.
- Significant sales growth in Europe by 134.40%, driven by the automotive sector.
- Notable growth in Asia (excluding India) with a 7.02% increase in sales.
- Steady growth in the Indian market with an 11.3% increase in sales.
- Investment in automation and technological advancements to improve manufacturing processes.
Negative Points
- Total income decreased by 5.18% to INR107.22 crore from INR113.07 crore in Q1 FY24.
- Profit before tax declined by 18.75% to INR21.75 crore.
- Profit after tax decreased by 19.41%, resulting in INR16.30 crore for the quarter.
- Sales in the USA dropped by 44.76% due to a slowdown in the US economy and automotive market.
- Increase in inventory days by 33 days in Q1 FY25 due to supply chain disturbances.
Q & A Highlights
Highlights of Shivalik Bimetal Controls Ltd (BOM:513097, Financial) Q1 FY25 Earnings Call
Q: In the Bimetal segment, specifically the motor segment, are you seeing customers moving to microprocessor-based smart relays from the current bimetallic relays? Also, what percentage of your sales in the Bimetal segment comes from this segment?
A: (Sumer Ghumman, Managing Director) The Bimetal business constitutes about 51% of total sales. The motor starter segment is less than 8% to 10% of our total Bimetal sales. We are not seeing any movement from mechanical relays to microprocessors at the moment.
Q: The Q1 FY25 revenue dropped by nearly 5%, largely due to lower commodity prices. However, despite lower commodity prices, the cost of raw materials has increased in Q1 FY25 versus Q1 FY24. Could you please explain the reason behind that?
A: (Sumer Ghumman, Managing Director) The product mix is different, with higher sales in areas with higher material consumption. (Rajeev Ranjan, CFO) Any increase in metal prices will impact our prices in the next quarter, not the same quarter.
Q: What is the reason behind inventory days increasing by 33 days in Q1 FY25?
A: (Rajeev Ranjan, CFO) We faced supply chain disturbances and decided to uplift some material through air, leading to accumulated inventory which will be consumed in the next few quarters.
Q: What is your view on domestic smart meter installation progress? When do we expect sales and volume growth in domestic markets?
A: (Sumer Ghumman, Managing Director) Domestic players are starting to manufacture relays in India, and we are already supplying smaller quantities. We expect strong growth in the coming quarters.
Q: What is your growth outlook for domestic and export markets in the context of global power deficit and increased switchgear demand?
A: (Unidentified Company Representative) The demand for power electrification and distribution is increasing globally. We have started receiving forecasts from customers domestically and internationally, indicating a positive outlook for the next five to six years.
Q: Assuming the global slowdown in EV continues, can the hybrid segment drive volume growth at a similar level?
A: (Sumer Ghumman, Managing Director) Hybrid cars may have a higher value of our products due to the constant switching between engine and battery. We see a positive opportunity with hybrids even if the EV market doesn't grow as expected.
Q: Regarding peak revenue potential, is the current infrastructure sufficient, or will additional CapEx be required?
A: (Rajeev Ranjan, CFO) All primary CapEx is already in place. Only incremental CapEx will be required over the next five years to reach peak revenue potential.
Q: Can you provide a number for the revenue generated from your top five customers?
A: (Rajeev Ranjan, CFO) The top 10 customers constitute almost 50% of our business. One or two of these customers were acquired in the previous two years.
Q: How much investment do you put into R&D on a yearly basis, and what is the trajectory going forward?
A: (Rajeev Ranjan, CFO) R&D expenditure includes human resources and machinery. We have heavily invested in machinery last year, so this year's incremental costs will be mainly human resource-related.
Q: What is the revenue growth and EBITDA margin guidance for FY25?
A: (Rajeev Ranjan, CFO) Revenue growth is expected to be in the range of 8% to 12% for FY25, with EBITDA margins between 22% and 24%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
