Talbros Automotive Components hosted a conference call on Nov 14, 2024. In the conference call, the company was represented by: Mr. Anuj Talwar– Joint Managing Director and Mr. Navin Juneja– Director and Group CFO.

Key takeaways of the call

The company showed robust growth in both business performance and profitability, even amidst a slowdown in the automotive sector. Growth was reported only in the 2W and 3W auto segments.

The company’s growth was fueled by effective execution of a robust order pipeline and improvements in operational efficiencies.

Over the last 18 months, the company secured several substantial new orders exceeding Rs 2,000 crore. A number of these projects are now entering the commercialization phase. This marks an important step as we transition from order acquisition to execution, setting the stage for revenue generation and reinforcing growth trajectory.

Capitalizing on order inflows from leading OEMs, management anticipate a strong upward trajectory in business and profitability.

Management indicated that the trend towards EV is expanding, and the company is also strengthened its EV portfolio, securing orders from both domestic and overseas OEM.

The company is expanding its focus on EVs through JV partner and from standalone business in the Forgings business.

The company has been working on improving margins for past few quarters. Management expects EBITDA margin to reach 15-16% by FY27.

Increased focus on expanding exports business shall further assist in improving margins going ahead.

In H1 FY25, Gaskets contributed 49% to revenue, forgings 28%, MTCS 13%, TMR 6% and heatshields 4%.

In H1 FY25, exports contributed 15% of Gaskets Revenue, 55% of Forgings Revenue, 19% Marelli Talbros Chassis Systems and 4% of Talbros Marugo Rubber.

In Q2 FY25, gasket & heat shield business grew 11% YoY. Forgings business grew 13% YoY, TMR remains flat and MTCS grew 5% on YoY basis.

In H1 FY25, gasket & heat shield business grew 10% YoY. Forgings business grew 17% YoY, TMR grew 2% and MTCS grew 13% on YoY basis.

In H1 FY25, 2&3 Wheelers contributed 17% to revenue, Passenger Vehicle 34%, HCV & LCV 22%, Agri & Off Loaders 13% and others 14%.

Based on market, OEMs contributed 63% to total revenue in H1 FY25, exports 26%, aftermarket 3% and others 8%.

The company plans to introduce innovative and value-added products that meet the evolving needs of the customers.

Management expects export contribution to increase to 35% by FY27.

The company plan to grow Gasket Business revenue by 13% CAGR till FY27 to Rs 700 crore supported by large order book for new products and increased Focus on Exports.

In H1 FY25, 2&3 Wheeler contributed 23% to total gasket revenue, PV 10%, MHCV 28%, LCV 11%, Agri and off loader 12% and others 16%.

The company plan to grow forgings business by 23% CAGR till FY27 to Rs 500 crore supported by increased Focus on EV’s and growing geographical presence.

In H1 FY25, 2&3 Wheeler contributed 2% to forgings business revenue, PV 39%, Agri and off loader 52% and others 7%.

In H1 FY25, EV share in total revenue stood at 2% and management expects it to reach 12% in FY27.

The company has a diversified customer base. In H1 FY25, its largest customer Maruti Suzuki India contributed 16% to revenue, Tata Motors 9%, Bajaj Auto 8%, Jaguar Land Rover 8%, Tata Cummins 7%, Cummins India 2%, BMW 6%, JCB 5%, DANA ITALIA SRL 3%, and VE commercial 3%.

Management expects total debt to remain under Rs 100 crore.

The board approved an interim dividend of Rs 0.20 per equity share of face value of Rs 2 each for the Financial Year 2024-25. The Record date for the purpose is 29 November 2024.