GuruFocus -
- Stand-alone Revenue: INR181 crores, increased by 6.33% quarter on quarter.
- Stand-alone Net Profit: INR18.36 crores, up from INR18 crores in the previous quarter.
- MEMCO Total (EPA:TTEF) Income: INR13.04 crores.
- MEMCO Net Profit: INR0.45 crores.
- MFT Total Income: INR27.3 crores.
- EMOSS Revenue: INR17 crores, down from INR46 crores in the previous quarter.
- Stand-alone EBITDA Margin: 20.5%.
- Stand-alone PAT Margin: 10.1%.
- Consolidated Total Income: INR238.8 crores, decreased by 9.2%.
- Consolidated EBITDA: INR35.6 crores, increased by 30.98%.
- Consolidated PBT: INR19.6 crores.
- Consolidated PAT: INR8.4 crores, with a margin of 3.5%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Precision Camshafts Ltd (BOM:539636) achieved a 6.33% increase in revenue quarter on quarter, reaching INR181 crores.
- The company's EBITDA margin was strong at 20.5%, with a PAT margin of 10.1% on a stand-alone basis.
- Subsidiary MEMCO showed improvement with a total income of INR13.04 crores and a net profit of INR0.45 crores.
- The company has a robust order book for the Camshaft business extending up to 2030, indicating long-term business security.
- Precision Camshafts Ltd is actively expanding its solar capacity, aiming to double it from 15 megawatts to 30 megawatts, which could reduce operational costs.
- The consolidated total income for Q2 decreased by 9.2% to INR238.8 crores, indicating challenges in overall business performance.
- EMOSS, the e-mobility subsidiary in the Netherlands, experienced a significant revenue dip due to the recessionary environment in Europe.
- The geopolitical instability in Europe, including the Russia-Ukraine conflict, has led to a shortage of parts and increased vehicle costs.
- The demand for e-mobility retrofit solutions in India is slower than expected, impacting growth projections.
- The company's German subsidiary, MFT, is facing ongoing profitability challenges, with no immediate resolution in sight.
A: About 50% of the business is domestic, and 50% is export, with approximately 20% going to Europe. The growth outlook is robust with a strong order book up to 2030, but specific growth figures for the next two to three years are not provided.
Q: What is the progress on the EMOSS business in Europe, and when is a revival expected?
A: EMOSS is facing significant headwinds due to delayed decision-making and subsidy shifts in Europe. A recovery is expected in two to three quarters, but specific scale projections are not available.
Q: What is the status of the new plant for the Camshafts and EV mobility business in India?
A: The plant is under construction and should be ready in two months, with operations expected to start by the end of next year. It will cater to both camshaft and e-mobility demands, including new projects for heavier vehicles.
Q: What is the capacity of the new Camshaft plant, and will it focus on higher-margin products?
A: The plant will initially produce 70,000 to 80,000 machined camshafts per month, with potential for higher capacity. It will focus on assembled and machined camshafts, which are higher-margin products.
Q: How is the non-engine business progressing, particularly in braking systems?
A: Production has started, but volumes are lower due to the European slowdown. New business has been won, and production will ramp up in 2025. The camshafts for braking systems are already in production.
Q: What are the plans for utilizing the cash reserves, and is there a possibility of returning some to shareholders?
A: Cash will primarily fund new investments in the camshafts and EV businesses, as well as expand solar capacity. Inorganic growth opportunities are also being considered. The suggestion of buybacks or dividends will be discussed internally.
Q: What is the capacity utilization for casting and machining camshafts, and what was the highest utilization in the past?
A: The casting capacity is 12 million camshafts per year, and machining is 4 million. Current utilization is 75-80% due to global volume reductions, with past utilization reaching 90%.
Q: What is the CapEx plan for increasing solar capacity, and what will it cost?
A: The plan is to double the solar capacity from 15 megawatts to 30 megawatts, with a similar investment to the previous INR60 crores for 15 megawatts.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.