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Suprajit Engineering Limited Q4 FY24 Earnings Call Summary
Earnings Call Overview • Date: May 30, 2024 • Submission to: BSE and NSE on June 5, 2024 • Key Management Participants: • K. Ajith Kumar Rai (Founder and Chairman) • N.S. Mohan (MD and Group CEO) • Medappa Gowda J. (CFO)
Economic Landscape • Rising interest rates and political shifts noted. • Impact of electric vehicles (EVs) on business discussed. • Strong order wins in the automotive division, including a significant U.S. contract.
Division Performance
Automotive Division
• Growth in Hungary and operational adjustments in North America. • Domestic cable division performed well despite grey market challenges.
Electronics Division
• Strong growth and double-digit EBITDA margins achieved. • Increased deliveries for components, especially in EV and ICE segments. • Internal manufacturing supports exports for Phoenix Lamps and SED.
Financial Results • Consolidated revenue increased by 5% to 2,896 crores. • Standalone revenue grew by 7%, with a 10% rise in standalone operational EBITDA. • Total debt: 624 crores; surplus cash balance: 513 crores.
CAPEX Plans • Planned CAPEX of approximately 180 crores. • Half allocated for maintenance; half for strategic investments, including a new technology center in Bangalore.
Challenges and Optimism • Challenges in Suprajit Controls division, but optimism for future improvements. • Targeting an EBITDA margin of 8% in the coming year for Suprajit Controls.
Market Insights • Concerns about the aftermarket segment due to grey market rise. • Anticipated growth in aftermarket despite challenges.
Tariff and Market Dynamics • Tariffs on Chinese products affecting North American market. • Optimism for recovery in Wescon business over the next two years.
Inorganic Growth Opportunities • Interest in consolidation opportunities amid global slowdown. • Focus on geographic reach and financial stability.
Product Development • Progress in advanced braking systems for OEMs. • Emphasis on safety and innovation in braking business.
Conclusion • Strong order book and growth potential in non-cable products. • Higher other income from mutual fund investments and forward contract gains. • Encouragement for further inquiries from stakeholders.
Suprajit Engineering Limited Q3 FY 2024 Earnings Conference Call Summary
Submission Details • Date of submission: February 21, 2024 • Conference call date: February 15, 2024 • Compliance with SEBI regulations
Key Management Participants • K. Ajith Kumar Rai (Founder and Chairman) • N.S. Mohan (Managing Director) • Medappa Gowda J. (CFO)
Financial Overview • Consolidated Revenue: INR 724 crores (5% increase YoY) • Standalone Revenue: INR 405 crores (10% increase) • Operational EBITDA Growth: 7% consolidated, 8% standalone • Total Debt: INR 622 crores • Cash Surplus: INR 500 crores (as of December 31, 2023)
Market Insights • Automotive Market: Growth in Indian passenger cars; challenges in entry-level two-wheelers and international markets (Europe, North America). • Non-Automotive Sector: Ongoing challenges, but potential improvements from new acquisitions.
Division Performance • Domestic Cable Division: Strong growth in passenger vehicles; introduction of "Beyond Cable" products. • Phoenix Lamps Division: Double-digit EBITDA margins; restructuring in Europe ongoing. • Suprajit Controls Division: Flat revenue and declining EBITDA; long-term restructuring in progress. • Suprajit Electronics Division: Strong growth and new contracts anticipated; focus on EV segment.
Future Outlook • Q4 Outlook: Positive operational stability and new business wins expected. • Controls Division: Anticipated double-digit growth as conditions normalize. • New Plant in China: Resuming operations in April; focusing on new contracts despite previous challenges.
Strategic Initiatives • Global Acquisition Opportunities: Exploring consolidation trends and enhancing global footprint. • Capacity Utilization: Targeting 75-80% utilization in international operations over the next 8-12 quarters.
Cash Management and Debt Strategy • Cash Position: Growing cash reserves despite interest expenses and CapEx plans. • Debt Management: Considering strategies for shareholder payouts and potential debt reduction.
Growth Projections • FY '25 Projections: Comfortable double-digit growth expected in the automotive sector; uncertain growth in non-automotive. • Aftermarket Recovery: Signs of improvement noted after previous stagnation.
Conclusion • Overall Business Traction: Strong sales and robust order position; confidence in achieving significant growth in the future.
Suprajit Engineering Limited Q2 FY24 Earnings Conference Call Summary
Key Management Participants • Ajith Kumar Rai (Founder and Chairman) • N.S. Mohan (Managing Director) • Medappa Gowda (CFO)
Market Update • Passenger Vehicle Segment: Strong performance in India. • Two-Wheeler Segment: Challenges in entry-level and commuter categories. • U.S. Non-Automotive Market: Struggles due to high inflation and interest rates. • Europe: Ongoing instability post-Ukraine war, but new business opportunities are emerging.
Division Performance • Phoenix Lamps Division: Reported growth and improved margins. • Domestic Cables Division: Stable EBITDA. • Electronics Division: Nearly 150% sales growth from Q1 to Q2, achieving EBITDA positivity.
Financial Results • Half-Year Ending September 30, 2023: Revenue increased to 1,389 crores; operational EBITDA rose by 6%. • Standalone Revenue: Slight decrease, but EBITDA growth noted. • Cash Surplus: Healthy position with optimism for the second half of the year.
Challenges and Outlook • Domestic Cable Business: Potential for growth in the second half. • Four-Wheeler Export Segment: Facing challenges due to postponed launches. • Non-Automotive Segment: Weakness attributed to high interest rates and global warming impacts.
Customer Concentration and Margins • Major customers include BMW, Volkswagen, John Deere, and Tesla. • Suprajit Controls Division: Declining EBITDA margins due to non-automotive sales slowdown and restructuring costs.
Future Funding and CAPEX • Company is well-funded to support subsidiaries. • Planned CAPEX of around 140 crores for FY24, with similar expectations for FY25.
Restructuring and Margin Improvement • PLD Division: Successful restructuring leading to consistent double-digit EBITDA margins. • Suprajit Controls Division: Competitive advantage due to global reach and manufacturing capabilities.
Market Dynamics • Two-Wheeler Technology: Limited presence of advanced clusters; focus on actuator business. • Digital Cluster Market: Competitive dynamics discussed with a focus on EV segment opportunities.
Risk Management • Emphasis on risk analysis and establishment of a risk committee for high-priority risks. • Implementation of a unified ERP system for better global operations monitoring.
Industry Consolidation • Excess capacity leading to reduction of weaker competitors, presenting opportunities for stronger players. • Five cable asset purchases made, with expectations for further consolidation in the auto components sector.
Conclusion • Ongoing restructuring costs will continue into the next year but are expected to stabilize thereafter. • The call concluded with a note of thanks and well wishes for Diwali.
Suprajit Engineering Limited Q1 FY24 Earnings Call Summary
Earnings Overview • Date of Call: August 14, 2023 • Consolidated Revenue: Rs. 680 crores (5% increase YoY) • Operational EBITDA: Rs. 74 crores (31% growth) • Total Debt: Rs. 613 crores • Surplus Cash Balance: Rs. 487 crores
Segment Performance • Automotive Segment: Marginal growth • Non-Automotive Sector: Challenges due to reduced consumer spending • Suprajit Controls Division: Strong growth • Suprajit Electronics Division: Successful launch and traction with EV customers
Management Insights • Ajith Kumar Rai's Comments: • Optimism for growth in the second half of FY24, especially in Electronics and Controls Divisions. • Challenges in non-automotive business due to high interest rates and inflation. • Projected double-digit growth for the Controls Division.
Product Development and Market Strategy • In-House Capabilities: Production of key components (cables, PC boards, etc.) to enhance value. • Lamps Division: Ongoing restructuring in Europe; expected double-digit EBITDA margins soon. • Electromechanical Actuator Market: Opportunities identified in India.
EV Sector and Subsidy Impact • FAME Subsidy: Reintroduction benefits Suprajit due to strong relationships with EV manufacturers. • Challenges for EV Companies: Potential repayment issues and product launch delays.
Financial Guidance and Market Position • Margin Expectations: Targeting double-digit margins in Electronics and Controls Divisions. • Integration of LDC: Focus on synergies and cost-reduction projects. • China Plus One Strategy: Demand for diversified supply chains.
Shareholder Concerns • EPS and Revenue Expectations: Addressed by management with a focus on double-digit growth. • Global Cable Industry Consolidation: Increased consolidation expected due to smaller companies struggling.
Future Investments • Electronics Division Investment: Planned Rs. 140 crores for the year. • Margin Guidance: Maintained at 24% for FY24, with expectations of recovery in various segments.
Conclusion • Management remains optimistic about leveraging client relationships and new product offerings for significant revenue growth in the coming years.
Suprajit Engineering Limited Q4 FY '23 Earnings Conference Call Summary
Submission Details • Date of submission: June 2, 2023 • Conference call date: May 30, 2023 • Compliance: Submitted transcript to BSE and NSE as per SEBI regulations • Key participants: • Chairman: K. Ajith Kumar Rai • Managing Director: N.S. Mohan • Chief Strategy Officer: Akhilesh Rai • CFO: Medappa Gowda • Moderator: Mumuksh Mandlesha from Anand Rathi Share and Stock Brokers • Transcript availability: Company website
Company Performance Overview • N.S. Mohan's Highlights: • Successful year in the Indian market despite 2-wheeler segment challenges. • Growth in passenger car segment and improved EBITDA margins. • Impact of Ukraine war on European car sales, but continued growth in the EU market. • Performance across divisions: • Domestic Cable Division (DCD): Good results amid market uncertainties. • Phoenix Lamps Division (PLD): Improved margins through price increases and cost reductions. • Suprajit Controls Division (SCD): Growth in automotive exports. • Light Duty Cable Division (LDC): Facing integration challenges. • Suprajit Electronics Division (SED): Focus on EV contracts and process establishment.
Outlook and Strategic Initiatives • Akhilesh Rai's Insights: • Decline in traditional 2-wheeler demand; rise in EV adoption presents opportunities. • Consolidation of overseas operations and addressing LDC challenges. • Innovation in product development, particularly in digital clusters and actuators. • Restructuring into four divisions for enhanced focus.
Financial Performance • Medappa Gowda's Report: • 50% revenue increase for the year ending March 2023. • Healthy margins across divisions. • Optimism about future growth, especially in the EV sector.
Challenges and Market Conditions • K. Ajith Kumar Rai's Address: • Price pressures in LDC due to delays in passing on supplier price increases. • Relocation of operations in China due to government mandates. • Optimism for double-digit margins in LDC within 1-2 quarters. • Strong growth prospects in SCD despite macroeconomic challenges. • PLD growth expected to achieve double-digit EBITDA margins long-term.
Export and Margin Outlook • Response to Abhishek Jain's Inquiry: • Positive outlook for export segment under SCD. • Projected consolidated margin of 12% to 14% for the current year. • Anticipation of returning to 13% to 15% margin range next year.
Future Growth and Investments • K. Ajith Kumar Rai's Projections: • Expectations for double-digit growth in the cable division. • Planned capital expenditure of approximately INR 140 crores over the next 18 months. • Cautious approach to inorganic growth, focusing on consolidating LDC.
New Product Development and Client Engagement • Focus on Suprajit Electronics Division: • Development of new products like digital clusters and actuators. • Engagement with top EV startups for collaboration on new products. • Continued growth in domestic aftermarket business due to increasing vehicle population.
Suprajit Engineering Limited Q3 FY 2023 Earnings Conference Call Summary
Overview • Date of Call: February 14, 2023 • Submission to BSE and NSE: February 17, 2023 • Key Management Participants: • K. Ajith Kumar Rai (Founder and Chairman) • N.S. Mohan (Managing Director) • Akhilesh Rai (Chief Strategy Officer) • Medappa Gowda (CFO)
Market Conditions • Challenges: Year-end stock corrections, inflation in the US and Europe. • Resilience in Indian market, especially in passenger cars. • Struggles in entry-level two-wheeler market. • Growth in Domestic Cable Division despite two-wheeler performance.
Financial Performance • Positive Q3 performance with LDC achieving positive EBITDA of 3.7%. • Consolidated revenue growth of 54% for nine months ending December 2022. • PLD achieved double-digit EBITDA margins for the first time in many quarters.
Future Outlook • Cautious near-term outlook but optimism for long-term growth. • Anticipated continued weakness in non-auto cable segment but expected improvement in Q1 of the following year. • Focus on new product development, particularly in EV segment.
Key Inquiries and Responses • Non-Auto Cable Segment: Slight degrowth attributed to North American recession; new business helped maintain flat performance. • New Projects: Aim to enhance product offerings to increase revenue per vehicle. • Patent Strategy: Most patents developed in-house, focusing on customer-driven challenges and innovations.
Division-Specific Insights • Cable Division: Margins improved due to price hikes and reduced raw material costs; 4-wheeler segment improved significantly. • SENA Division: Revenue flat due to reduced volumes from non-automotive customers; expected growth for the year. • PLD: Improved margins due to stabilized commodity prices and cost reduction programs.
Strategic Initiatives • Acquisition of LDC enhances manufacturing, R&D, and global reach. • Shift from OEM to aftermarket sales in Phoenix division, now at 70% aftermarket. • Focus on strategic relationships with OEMs and organizing tech shows for customer engagement.
Conclusion • Confidence in Cable Division's growth potential beyond two-wheelers. • Discussion on declining other income due to forex impacts and rising energy costs. • Invitation for further questions from participants.