Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sharda Motor Industries Ltd (BOM:535602, Financial) reported a gross profit growth of 8% in Q2 FY 25 compared to Q2 FY 24.
- The company achieved a strong EBITDA growth of 20% for H1 FY 25 compared to H1 FY 24.
- Sharda Motor Industries Ltd (BOM:535602) secured an export order for emission components to the US market, valued at approximately $7 million annually.
- The company maintains a healthy liquidity position with over INR782 crore in cash and cash equivalents.
- The utility vehicle category showed strong performance with a 12.3% growth, driven by consumer preference for multifunctional vehicles.
Negative Points
- The company's revenue declined by 7% in Q2 FY 25 compared to Q2 FY 24.
- Passenger vehicle sales volume experienced a slight year-on-year decline of 0.6% in Q2 FY 25.
- The commercial vehicle segment saw a 9.2% year-on-year decline in Q2 FY 25, with domestic demand lagging by 11%.
- Other expenses increased by 14% year-on-year, attributed to job work and labor hire charges.
- The company faces challenges in predicting specific momentum due to market volatility and global changes.
Q & A Highlights
Q: Can Sharda Motor Industries sustain the gross profit growth shown in the first half of the year?
A: Aashim Relan, CEO, stated that while they aim to outperform the industry, predicting specific momentum is challenging due to market volatility. Gross profit remains a key metric to watch.
Q: Could you provide more details about the recent export order for emission components to the US market?
A: Aashim Relan, CEO, explained that the order is for advanced emission systems for commercial vehicles, expected to start in January 2026. This marks a significant entry into the US market and offers potential for future cross-selling opportunities.
Q: Are the improving EBITDA margins sustainable, and what range can be expected going forward?
A: Aashim Relan, CEO, noted that the margins have benefited from accounting changes related to catalysts. While it's difficult to provide a specific range, the focus on newer products without catalysts should support better margins.
Q: What is the outlook for the construction equipment market with new norms effective from January 2025?
A: Aashim Relan, CEO, mentioned that while volumes are low, the company is developing customer relations and focusing on high-value products like temperature-controlled tubes. Revenue from this segment is expected to start in mid-2025.
Q: How is the joint venture with the international partner progressing?
A: Aashim Relan, CEO, stated that the JV remains stable with sticky products. A new localization program is expected to boost the JV's performance by mid-2026.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
