Analyst Meet / AGM - Analyst Meet
Railways which contributed around 7% of total revenues in FY 17, is going to contribute around 15-17% in next 2 years
The company held its Investor Meet on 8th Feb 18 and was addressed by Mr. Shishir Joshipura, Managing Director
Key Highlights
On a like to like basis net of GST adjustments, revenues increased by 9.5% yoy in Dec 17 quarter. Sales to aftermarket and industrials recovered post GST issues in previous quarters. But still not reached to optimum levels.
The company gained significant market share in passenger vehicle bearing segment and transmission bearings. Bearings towards wind energy and industrials also have done well during the quarter.
Revenue mix for the quarter: auto OEM: 28%, auto aftermarket: 12%, industrial OEM: 25%, industrial replacement: 25% and exports: 10%.
The supply of 3rd generation wheel bearings commenced in Dec 17 quarter to passenger vehicle OEMs. As per the management, passenger vehicle OEMs are placing increasingly higher orders for third-generation bearings, which is reflected in RFQs (Request for Quotation) for cars to be launched over FY2018-20E.
Strong traction is seen in Railway segment. The company provides various products and solutions for freight car applications. Railways contributed around 7% of total revenues in FY 17 and around 10% for 9 months ended Dec 17. Railway contribution as a % of sales is going to be around 15-17% in next 2 years.
Industrial side sales were strong in Dec 17 quarter and company was able to generate better margins in trading. Favourable forex also helped in lower landed costs and higher realisation. The company will start the inhouse production and thus will reduce emphasis on trading going forward.
Revenues from manufacturing was around 60-62% of total sales and rest was trading.
Raw material price increase is a worry. But with better product mix and higher realisations this has been taken care of. A constant increase if any will warrant some margin pressure in future.
The company and group are fully prepared for any transitions happening in auto and industrial segment in future.
Current capex guidance is around Rs 90-100 crore. Will be reviewed at the end of the year board meeting for future product requirements and business mix.
Overall growth momentum is expected to continue going forward. Management is optimistic about the future.
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