Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Shivalik Bimetal Controls Ltd (BOM:513097, Financial) demonstrated resilience despite a global inventory reset, maintaining stable revenue with a slight decrease of 3.86% from H1 FY24.
- The company recorded a gross margin of 46.57% for H1 FY25, reflecting strategic adjustments in product mix to align with market needs.
- The shunt segment in India grew by 45.27%, indicating strong alignment with India's industrial expansion and technological modernization.
- Establishing a wholly owned subsidiary in Italy is a strategic move to enhance market presence and reduce operational redundancies in Europe.
- The company is experiencing growth in the smart meter segment, with expectations to double last year's business, driven by increased local production of latching relays in India.
Negative Points
- Revenue for H1 FY25 decreased by 3.86% compared to H1 FY24, indicating challenges in maintaining growth amidst global market adjustments.
- Gross margin declined by 272 basis points compared to the previous year, due to a strategic pivot towards high-demand, lower-margin products.
- Profit Before Tax for H1 FY25 decreased by 11.09% from H1 FY24, with a margin contraction of 178 basis points, influenced by rising input costs.
- The US market showed a decline in the shunt business, impacting overall revenue despite growth in other regions.
- The company faced challenges in the European and some Asian markets, with actual reductions in demand affecting bimetal business volumes.
Q & A Highlights
Q: How do you see Shunt's growth in the US market for H2 this year and over the next three years?
A: Sumer Ghumman, Director, mentioned that they expect growth from Q4 onwards, with forecasts indicating an increase in quantity. Growth is anticipated from existing business and new opportunities developed over the last couple of years. Additionally, substantial growth is expected in other markets like India.
Q: What is the reason for the Q-on-Q decline in shunt business overall revenues this quarter?
A: Sumer Ghumman explained that the decline is primarily due to the US market, which is still under decline. However, growth in other markets has mitigated the overall decline.
Q: With the US election over, how do you see the policies being favorable to the company?
A: Sumer Ghumman stated that the US election results are favorable towards businesses and large corporations, which should positively impact their business, especially given their significant US market presence.
Q: Can you provide an update on the metal MOU and any progress on that?
A: Sumer Ghumman noted that the joint venture was not suitable due to high investment requirements with insufficient business returns. They are considering alternate arrangements or not proceeding with it.
Q: Are there any new products developed by the R&D team in the last 4-5 months that could provide future revenue guidance?
A: Kabir Ghumman mentioned ongoing developments in downstream value addition, with initial trials and prototyping completed. They are realigning some processes to meet changing customer specifications, with updates to be provided as progress continues.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
