Shivalik Bimetal Controls hosted
a conference call on Feb 9, 2024. In the conference call the company was
represented by Rajeev Ranjan, CFO and Kanav Anand, Head of Sales &
Marketing of the company and Sumeer Ghumman, MD of Shivalik Engineered
Products. Key takeaways of the call Reported growth in sales for
Q3FY24 and 9mFY24 despite facing moderated market demand Shivalik Bimetal
Controls. Metal prices will have impact on the
sales price and the realization value of the company. Easing of commodity
prices in last 1 year have its impact on sales and realization. Sales of Thermostatic, Bimetal,
Trimetal segments in Q3 FY24 and 9mFY24 was up by 22.22% and 22.10%
respectively. This growth, particularly in the Asia region, positions it well
in the global electrification landscape and reflects the effectiveness of initiatives
of the company. About 60% of the total Shunt
business is into automotive applications. Then about 13%-15% goes into metering
applications and close to about 8%-10% is into energy storage and the rest is
basically miscellaneous and other applications. Almost 65% of Bimetal business comes from switchgear and
circuit breaker application, about
15%-20% from appliance business, 8% from
gas metering applications and rest from other applications. Shunt has a little higher margin over that of
Bimetal. So lower gross margin is
largely to do with product mix with increased contribution from Bimetal. In the
last three quarters growth was largely
from Bimetal rather than Shunt. The ratio of Shunt:Bimetal is 45:55 compared to
last year where it was 49:51. Domestic shunt business is
witnessing the benefit of growth of smart metering. Expect the strong demand
from smart metering to grow in 2024-25 as well. On Shunt and the Bimetal side the
company is working at a capacity utilisation of 38% and 39%. So don’t have any
capacity constraints as far as shuts/bimetal but it has capacity constraints as
far as silver contact business. The new Himachal silver contact
facility is almost in ready stage and the plant should be functional may be in
another 5-6 months. The new plant can
give a peak revenue of about 250 to 300 crore. On demand side, the numbers are
growing pretty strongly in case of Asian & European markets but the North
American market demand is muted for the last one year. But if that comes back, the
company is confident of achieving the previously projected numbers. The shunt demand is going to start picking up
from second half of the year and already seeing a lot of customer engagement
happening right now on the schedules and the forecast, the numbers that are
coming forward. On the Bimetal front, lot of
demand growth coming from domestic market with lot of emphasis has been on infrastructure, up-gradations
and improvements. The strong growth is expected to continue for next couple of
years even though there will be some impact for couple of months due to general
elections. The 10-40% revenue growth
guidance is largely as the automotive Shunt requirement specifically of North
America is weak there by leaving the overall growth at about 10-12%. Even if
the market situation doesn’t improve in case of NA automotive Shunt demand, the
company see its revenues still improving in the near future. The North American
market is expected to rebound in second half of CY2024. And if
that does rebound and the other holds up at current level the greater growth
numbers is very much a possibility. On contact side, the current
EBITDA margin is about 11%-12% and the
company expect margin improvement to the tune of 1.5-2% with new plant coming into
operation as it is more efficient plant set up with large capacity unlike the
existing plant which was built organically over a period of time. The gross margin for Bimetal is
somewhere in between 44-46% and for Shunt
it is somewhere in between 48-52%.
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