Alicon Castalloy hosted a conference call on May 18, 2023. In the conference call, company was represented by, Mr. Rajeev Sikand – Group CEO, Mr. Vimal Gupta – Group CFO and Mr. Shyam Agarwal – General Manager (Marketing).

Key takeaways of the call

In Q4 FY23, the Company has booked 2 new parts from 2 existing customers. This includes 2 part from PV and both parts pertain to the EV / Carbon Neutral segment.

1 part is for international business and other for domestic business.

Revenue and volume during Q4 FY23, was impacted by dip in 2W volumes due to scaled down production schedules by OEMs to incorporate upgrades in products as stipulated by regulations.

In FY23, company reduced its dependance of 2W business from 41% to 38%. Increased its share of four-wheeler business.

In FY23, company outperformed the industry with revenue growth of 30% YoY. Revenue growth was driven by higher volumes on a YoY basis and start of production on new business. This has been supported by improved contribution from international subsidiary — Illichman.

In FY23, company has booked new orders worth Rs 1700 crore. Total order bookings has reached Rs 7800 crore.

Management expects to clock revenue of over Rs 2000 crore in FY25-26 driven by new order wins and discussions with customers on new technology and solutions.

Higher other income and lower tax has limited the impact on Profit in Q4 FY23.

In FY23, auto segment contributed 93% of total revenue and Non-auto 7%. Domestic market contributed 78% to total revenue in FY23 and exports 22%.

In Q4 FY23, auto segment contributed 92% of total revenue and Non-auto 8%. Domestic market contributed 79% to total revenue in Q4 FY23 and exports 21%.

In FY24, capex will be around Rs 90 crore.

In Q4 FY24, share of carbon neutral business was 9%.

Management expects to improve EBITDA margin going forward on back of improved product mix. long term target is to clock 14% EBITDA margin.

Company is ready to tap opportunities arising from (1) preference for Carbon Neutral tech such as hybrid, EV, fuel cells and hydrogen cells, (2) Staggered introduction of scrappage policy, (3) Thrust on higher fuel efficiency and (4) Cost-optimization & light-weighting of products.

In Q4 FY23, domestic automobile market witnessed 0.6% growth on a yoy basis, driven by 13% growth in PV segment on a yoy basis, 6.5% YoY growth in CV segment and 3% decline in 2W segment on a yoy basis.

PVs witnessed strong growth due to normalization of economic activity and new launches by OEMs. CVs witnessed continued growth on the back of sustained infrastructure spend and strong demand for buses. 2W industry''''''''s demand remained sluggish due to regulations pertaining to onboard diagnostics (OBD) causing OEMs to recalibrate their production schedules.

Apart from Europe, international markets, including the USA, Japan, and South-east Asia, have experienced improved growth rates.

Management indicated that no customers contribute greater than 15% of total revenue.

Semi-conductor chip shortage has begun to ease.

Management indicated that EV transition in India is slower due to phasing out of subsidy and lack of products in the mass-market segment.

In India, number of EVs sold increased from 3.2 lakh in CY2021 to around 10 lakh vehicles in CY2022, an increase of over 200%.

Company has plans to diversify its energy mix, lower interest cost and reduce overheads.

In Q4 FY23, Manufacturing facilities operated at utilization levels of around 65%.

Board declared an interim dividend of Rs 2.50 per Equity Share of Rs 5 each (50 %) for the Financial Year 2022-2023. 19 May 2023 was fixed as record date for the same.

Management commentary: Rajeev Sikand, Group CEO, Alicon Castalloy said, “We are pleased to end fiscal year 22-23 with a consolidated total income of Rs. 1,405 crore, representing 30% growth on a year-on-year basis. Our transformation initiatives, firmly rooted in our comprehensive 5-pillar strategy, consistently reinforce our position as the preferred partner for both domestic and global customers. Profit after tax for financial year 22-23 was Rs. 52 crore, higher by 114% on a year-on-year basis. This growth in profitability is attributed to higher volumes, driven by new parts and customers, as well as increased value addition and cost optimization measures. The Board has recommended an interim dividend of Rs. 2.5 per share in view of the performance. We have exerted substantial efforts to revamp our business model, positioning ourselves as an agile and diversified entity that capitalizes on our inherent strengths of design excellence, value engineering and consistent execution. Our global teams have actively fostered deeper customer engagements harnessing these capabilities leading to an improving frack record and enhanced order wins. FY23 was a year of consolidation after experiencing significant macro-economic challenges for the last 3 financial years. We believe that we have reclaimed our pre-pandemic base and will look to resume our longer term growth trajectory in FY24 on the back of a cautiously optimistic outlook."