Alicon Castalloy hosted a conference call on Nov 16, 2024. In the conference call, the company was represented by: Mr. Vimal Gupta – Group CFO, Mr. Shyam Agarwal – General Manager (Marketing) and Mr. Rajiv Gupta – Head of Domestic Business.

Key takeaways of the call

The Indian Auto Industry reported a healthy performance with 9% volume growth, driven by the 2W segment.

The company reported strong revenue growth in Q2 FY25 driven by supply of new parts from recent order wins as well as scale up of volumes from domestic two-wheeler customers.

Auto volumes would have been better in Q2 FY25 but the Shraddh period negatively affected sales, resulting in a YoY decline across various categories, with discounts and offers introduced to boost demand yet to show significant impact. This resulted in a weak performance in the month of September 2024.

In India, dealer volumes soared to a historically high mark of 80-85 days as of 30 September 2024. However, outlook for Q3 FY25 remains positive supported by rural demand and festive season.

Total new order bookings surpassed Rs 9,000 crore, which are executable over 6 years.

The company is engaged with number of high profile clients. The company is evolving from a casting provider to fully machined products, resulting in increased value addition.

In Q2 FY25, the company booked 13 new parts from 5 customers. This includes 5 parts from EV/CN, 7 parts from ICE, and 1 part from the structural business. In terms of geographical diversification, 6 parts are for the domestic market and 7 parts for the global market.

The 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 vehicle scrappage policy and (3) Thrust on higher fuel efficiency & light-weighting of products.

The company is building capabilities for new technology platforms in the automotive industry.

In H1 FY25, Manufacturing facilities operated at utilization levels of around 76-77%.

In Q2 FY25, Auto business contributed 94% to total revenue and Non-Auto 6%.

Freight costs have risen impacting cost of doing exports.

In Q2 FY25, Domestic business contributed 77% to revenue and Global 23%.

The company is not reliant on a single ‘anchor’ customer, as none of the customers contributes greater than 15% of turnover.

In H1 FY25, capex was approximately Rs 100 crore. Management has guided a capex of Rs 150 crore for FY25.

Management commentary: “We are delighted to report another strong performance in Q2FY25 with revenues of Rs. 464 Crore. This is now the fourth consecutive quarter in which we have reported our highest-ever quarterly revenues. For H1FY25, Revenues of Rs 904 crore are higher by 23% on a year-on-year basis. Our strategic focus on capturing higher-value opportunities in the passenger and commercial vehicle segments, are paying dividends. Our efforts have not only driven top-line growth but also enhanced profitability, with PAT for H1 FY25 rising to Rs 36 crore, a significant year-on-year increase of 49%. Our strategic alignment with key megatrends—electrification, lightweighting, hybridization, and automation—has positioned us to effectively capitalize on emerging opportunities. Simultaneously, we have elevated our focus on agility, sustainability, and digitization across operations, prioritizing transformative advancements in Research and Development, design, and production. These efforts are making a tangible impact, reinforcing our ability to innovate and adapt. We are well poised to seize the future with technology."