Salzer Electronics hosted a conference call on Nov 18, 2024. In the conference call the company was represented by Rajesh Doraiswamy, Joint Managing Director

Key takeaways of the call

Revenue in Q2FY25 grew by 22.62%YoY and was mainly driven by higher demand for Industrial switchgear as well as wires and cable businesses mainly due to high demand products like three phase transformers, wire harness, relays and new product like contactors etc.

Contribution from Exports in Q2FY25 stood at 29.15%, export revenue grew 3.1% YoY in Q2FY25, driven by higher sales from North and South America, Middle East and Africa and Asian countries.

Received first small order of Rs 5 crore for smart meters.  This achievement is a testament to the team''s dedication to advancing smart metering technology. Smart meter solution of the company has garnered significant interest, with evaluations currently underway by at least six additional AMISPs across India. And the company is in advanced discussions with these partners and is optimistic about securing further orders. The company will start invoicing of its first smart meter order from Nov 2024 end or Dec 2024 onwards.

Expect a growth of 20-22% for FY25 in top-line and that is in line with projection given earlier. The company earlier expected Rs 200 crore of revenue from smart meters for FY25 but now it is not expected at that level and will be lower than that.   

For FY26 the company expect the revenue of existing business to increase by 20% (or Rs 1600 crore) with EBITDA margin improve to 11%.  Additionally the company expects revenue of Rs 700 crore from smart meters.  So total revenue guidance for FY26 is Rs 2300 crore.    Of the existing business revenue guidance of Rs 1600 crore about 50-55% will be from switchgear business with its EBITDA margin of 12.5%.

For FY26 the company will see some revenue from EV Charger business but major revenue will flow from FY27 onwards from EV Charger. Already has a capacity of 100 EV chargers a month.  The company will solve all the issue in relation to EV Charger business by March 2025 and will come up with a business plant in FY26.

For smart meters the company expects an EBITDA margin of 12-14%. 

Sold about 1.55% stake in Kaycee Industries, a listed subsidiary of the company during Q2FY25.  The profit from sales of stake of about Rs 15.6 crore (net of long term capital gain tax was Rs 13.8 crore) was accounted part of other income in Q2FY25.  The company continue to hold about 71.96% stake and the reason for stake sale is want to cash on rise in stock prices of Kaycee Industries.   

Transformers - The company is not into manufacture and sale of distribution transformers for discoms but its transformers is upto 690 volts with application into usage within buildings and equipments.

Focusing on maintaining a balanced business mix between industrial switchgear and wires & cables products to manage   overall margins.

EBITDA margin in Q2FY25 for Switchgear was 12.5% that for Wires & Cables was 6.9%. 

Have seen positive trend in decreasing raw material cost, expect this to continue which helped to improve our EBITDA Margins.

Based on the domestic and export outlook, it is optimistic on overall business performance of the company.