Sandhar Technologies hosted a conference call on Feb 9, 2024. In the conference call, the company was represented by Mr. Jayant Davar : Co-Chairman and Managing Director and Mr. Yashpal Jain : CFO.

Key takeaways of the call

Revenue growth during the quarter was driven by robust demand by customers, increased content share per vehicle and new projects going into mass production.

Going forward, management expects company to continue to grow, supported by new capex turning into production and favourable shift in the business environment.

Company expect Q4 FY24 quarter to be strongest driven by robust order bookings.

Company aims to focus on increasing operational efficiency, improving margins and return on capital.

Management stated that Romania project is underutilized at 15% capacity. Company expects production to ramp up in Romania plant.

In Q3 FY24, locking and vision systems contributed 25.5% to total revenue, Cabins & Fabrication 14.3%, Sheet Metal 12.2%, ADC – Overseas 12.3%, ADC – Domestic 10.9%, Assemblies 10.4% and Others 14.4%.

In 9M FY24, locking and vision systems contributed 25.1% to total revenue, Cabins & Fabrication 14.1%, Sheet Metal 15.4%, ADC – Overseas 14.2%, ADC – Domestic 11%, Assemblies 10.7% and Others 9.5%.

Management reported that TVS motors is now the biggest customer for the company, which contributes 30% to revenue. Hero contributed 19% and Royal Enfield 4%.

In 9M FY24, 2-Wheelers contributed 57.9%, Passenger vehicles 19.4%, OHV 14.9%, CV 2.1% and others 5.7%.

In Q3 FY24, 2-Wheelers contributed 57.9%, Passenger vehicles 18.4%, OHV 15%, CV 2% and others 6.7%.

Execution of new projects, increase in basket of products supplied to the OEMs and strong overseas operations to drive growth for the company.

Company registered healthy improvement in consolidated EBITDA margin. Company expects to clock double digit EBITDA margin in FY25.

Company expects most OEMs to adopt smart locks in FY25, which auger well for the company.

In the EV sector, as of now company is progressing with three product lines: DC-DC converters, EV chargers, and motor controllers with larger plans for future. Approvals and validations are underway. Company has established a wholly owned dedicated subsidiary namely Sandhar Auto Electric Solutions for the same. This will diversify the product profile and bring additional revenue for the company.

Company on 23rd January, 2024, executed Share Purchase Agreement to acquire 12,05,000 (Twelve Lakh Five Thousand) equity shares equivalent to 20.08% of the total issued and paid up share capital of M/s Sandhar Tooling. The aforesaid acquisition was completed on 31 January 2024. This Acquisition is in line with STL’s long-term strategic objective and aiming to create a differentiated scale play in Tooling and Automotive Business.

Cash generated during quarter ended Dec 2023 was Rs 104 crore.

Company expects net debt to reduce by about Rs 100 crore in FY25.