Sona Blw Precision Forgings Limited has informed the Exchange about Investor Presentation
Q1 FY23 Earnings Presentation
28 July 2022
Disclaimer
This presentation and the accompanying slides (the “Presentation”), which have been prepared by Sona BLW Precision Forgings Ltd. (the “Company”), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any contract or binding commitment whatsoever. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed information about the Company.
This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, this Presentation is expressly excluded.
Certain matters discussed in this presentation may contains certain forward looking statements concerning the Company’s future business prospects and business profitability. Such forward- looking statements are not guarantees of future performance and are subject to a number of risks and uncertainties that are difficult to predict. These risks and uncertainties include, but are not limited to, the Company’s ability to manage growth, the fluctuations in earnings, competition (both domestic and international), economic growth in India and abroad, ability to attract and retain highly skilled professionals, time and cost over runs on contracts, the Company’s ability to manage its international operations, Government policies and actions regulations, interest and other fiscal costs generally prevailing in the economy. The Company does not undertake to make any announcement in case any of these forward looking statements become materially incorrect in future or update any forward looking statements made from time to time by or on behalf of the Company.
© Sona BLW Precision Forgings Limited (Sona Comstar). Reproduction and distribution of this Presentation without the permission of Sona Comstar is prohibited.
2
Our Management Team
Mr. Kiran Manohar Deshmukh Group CTO
Mr. V. Vikram Verma CEO, Driveline Business
Mr. Sat Mohan Gupta CEO, Motor Business
Mr. Rohit Nanda Group CFO
Mr. Vivek Vikram Singh MD & Group CEO
Mr. Amit Mishra Head, Investor Relations
3
Q1 FY23 Financial Performance Highlights
5,892 mn | 18%
1,425 mn | 3%
758 mn | 5%
Revenue | YoY Growth
EBITDA | YoY Growth
PAT | YoY Growth1
24.2% EBITDA Margin
12.9% PAT Margin
1,627 mn | 68%
EV Revenue | YoY Growth
29% Q1 FY23 Revenue Share
from EV
Notes: 1.
Calculated after excluding exceptional income of Q1 FY22
4
We continue to grow despite the persistent challenges faced by the automotive sector in the last two years
5,393
5,007
5,857
+18%
4,941
5,500
5,892
3,648
4,681
23.62
21.47
21.46
21.70
1,355
16.14
18.63
20.71
19.86
-17%
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
FY21
FY22
Sona Comstar Revenue (Rs. mn)
Global Light Vehicle Sales Volume (mn)
Data source for global light vehicle sales: Nomura
18.02
Q1
FY23
5
Update on our Strategic Priorities
Net formed differential gears coming out of our forging press
Update on our Strategic Priorities
Electrification
Global Market Significance
Diversification
Technology
7
Sizeable and Increasing Presence in EVs
29%
1,627 mn
68%
Q1 FY23 Revenue Share
Q1 FY23 BEV segment
Q1 FY23 BEV revenue
from BEV
revenue
YoY growth
30 (9+21)1
EV Programs1 awarded across
19 customers as at the end of
Q4 FY22
+6
36 (10+26)1
EV Programs1 awarded across
23 customers as at the end of
Q1 FY23
Notes: 1.
Include only BEV and PHEV programs currently in serial production as well as in the orderbook; numbers in brackets to be read as (# of programs in serial production + # of programs in orderbook)
8
3 significant EV program wins in Q1 to drive diversified EV growth
Traction Motors for Electric 2-Wheelers
Final Drive Differential Assembly for Electric Cars & SUVs
1 program from Indian OEM of Electric and ICE 2 Wheelers
2 programs from European OEM of PVs and EVs
₹ 9,128 mn
addition in our orderbook
FY23
SOP Year
₹ 16,071 mn
addition in our orderbook
FY26
SOP Year
9
36 EV programs across 231 different customers
No. of programs customers
3, 4, 5
19 10
-
3
4
4
4
3
3
-
7
3
6
3
5
-
-
North America 4 Customers 3 9
6
9
Europe2 5 Customers 1 5
6 2
+1
7
+3
Asia 4 Customers 2 2 3 1
4
Programs in serial production
Programs in orderbook
Programs for geartrain components
Programs for traction motors, IMCM and PHEV starters
Programs for e-Axle
16
+3
India 13 Customers 4 6
12 7
+3
3
+x denotes the change during Q1 FY23
Notes: 1. 2.
2 customers are present in more than one geography Europe geography includes the UK
3. 4. 5.
1 customer is common across PV geartrain and CV/OHV geartrain 1 customer is common across PV geartrain and PV motors 1 customer is common across PV geartrain and E3W e-Axles
10
Our Strategic Priorities
Electrification
Global Market Significance
Diversification
Technology
11
With new wins of Rs. 28 billion our net order book1 grows to Rs. 205 billion (9.6x FY22 revenue)
186 bn
Orderbook at the end of Q4 FY22
9 bn
Orders consumed from matured and ramp-up programs during Q1 FY23
28 bn
Orders added for programs won in Q1 FY23
205 bn
Orderbook at the end of Q1 FY23
EV Rs. 137 Billion (66.7%)
Non-EV Rs. 68 Billion (33.3%)
# of Programs
# of Customers
55.9% 14 8
PV
10.1% 8 7
0.8% 4 4
16.3% 30 13
10.6% 19 8
6.4% 45 16
2W &3W
CV &OHV
PV
CV
OHV
Notes: 1.
Net order book means the aggregate revenue from awarded programs which are either yet to start production or are yet to fully ramp up, in the next 10 years, after adjusting for the negative impact of all programs that are expected to reach end of life or be phased out. We have also applied a discount to accommodate any unforeseen delays or changes in program launches that may happen in the future.
12
Our Strategic Priorities
Electrification
Global Market Significance
Diversification
Technology
13
Diversified Revenue Mix – By Powertrain
Battery EV increasing as a % of our revenue continues to be our dominant and secular theme
Our pure ICE dependence continues to reduce steadily going from 25% in FY21 to 17% in Q1 FY23
FY20
FY21
FY22
Q1 FY23
2%
29%
42%
27%
14%
27%
34%
25%
25%
26%
31%
18%
29%
17%
37%
17%
Battery EV
Micro-hybrid / Hybrid
Powersource Neutral
ICE Dependent
14
Diversified Revenue Mix
By Geography
1%
18%
By Product
1% 1%
3%
33%
17%
27%
22%
FY22
FY22
26%
8%
1%
Q1 FY23
13%
32%
25%
4% 2%
3%
26%
27%
46%
17%
Q1 FY23
30%
17%
By Vehicle segment
FY22
68%
16%
15%
1.5%
PV
Q1 FY23
CV
OHV
E2W/E3W
67%
14%
15%
4%
15
Our Strategic Priorities
Electrification
Global Market Significance
Diversification
Technology
16
Technology Roadmap
Autonomous /Connected
Electric
GaN Inverter
Liquid Cooled Inverter
High Voltage Inverter
DC-DC Converter
High Voltage Traction Motors
Integrated P4 e-Axle
Motors for Bots and Industrial Automation
Predictive Active Suspension Integrated Motor Controller Module
Low Voltage Inverter
Magnet-free Motors, EMSM and SRM designs
Mid-mount Drive Motor (PMSM)
Hub Wheel Motor (BLDC)
Axial Flux Motors
Belt-driven Starter Generator (BSG)
Rigid e-Axle
Reduction Drive Unit
Independent suspension e-Axle
Epicyclic Set
Active Biased Differential
Diff Gears
Starter Motors
Diff Assembly
Spool Gear
Net Spiral/ Hypoid Gears
Future Products
Current Products
Legacy Products
Note: The product images shown are for illustration purposes only and may not be an exact representation of the products
17
Q1 FY23 Financial Update
Our final drive gears
Q1 FY23 Financials
1 Revenue (Rs. mn)
BEV
YoY: 18%
5,892
1,387
YoY: 3%
1,425
5,007
967
1,627
27.7%
24.2%
EBITDA (Rs. mn)
EBITDA Margin (%)
PAT (Rs. mn)
PAT Margin (%)
YoY: -8%
822
YoY: 5%
758
723
16.4%
14.4%
12.9%
Q1 FY22
Q1 FY23
Q1 FY22
Q1 FY23
Q1 FY22 Q1 FY22 (adj) Q1 FY23
2
o BEV Revenue higher by 68% and constitutes
29% of total revenue
o Non-BEV Revenue grew by 6% despite decline of 14% in light vehicle sales in our top-3 markets (North America, India, and Europe)
Notes: 1. 2.
Revenue includes net gain from foreign exchange As shown on page no. 34 of Q1 FY22 earnings presentation
o Drop of ~3.4% in EBITDA Margin is due to increase in RM prices largely because of arithmetic effect despite material price passthrough
o Additional costs on account of severe power outages Rs. 21 mn and one-time expenses relating to tech partnerships Rs. 13 mn neutralized the favourable impact of operating leverage
o Lower finance cost (as % of revenue) has improved margin transmission from EBITDA to PAT by ~0.9%
o Adjusted PAT for Q1 FY22 has been
adjusted for IPO expenses
19
Illustration of change in margin with 100% RM cost passthrough
(numbers in INR)
Revenue
Material Cost
Material Profit
Material Margin
Before RM price increase
RM price increase @25%
After RM price increase
100.00
45.00
55.00
55.0%
+11.25
+11.25
-
560 bps
111.25
56.25
55.00
49.4%
Ceteris paribus, 25% RM price increase should lead to 560 bps margin decline even with 100% RM cost passthrough
20
We have largely contained margin impact amidst unprecedented RM inflation during the last year, through growth, passthrough and other measures
+25%
27.7%
26.4%
26.4%
24.6%
24.2%
-350 bps
Q1
Q2
Q3
Q4
Q1
Q2
FY22
FY23
Indexed Sona Comstar Alloy Steel Cost
EBITDA Margin
21
Key Ratios
VA/Employee cost
RoCE (%)
RoE (%)
5.1
5.2
5.7
5.9
28.8%
36.1% 32.4% 28.9%
30.4%
34.6% 36.3% 28.8%
Mar-20 Mar-21 Mar-22 Jun-22
Mar-20 Mar-21 Mar-22 Jun-22
Mar-20 Mar-21 Mar-22 Jun-22
Net Debt to EBITDA
Working Capital Turnover
Fixed Asset Turnover
3.9
3.9
3.9
3.9
4.6
5.0
4.7
4.5
0.76
0.43
(0.01)
(0.05)
Mar-20 Mar-21 Mar-22 Jun-22
Mar-20 Mar-21 Mar-22 Jun-22
Mar-20 Mar-21 Mar-22 Jun-22
Note:
1) 2)
3)
VA/Employee Cost = Material margin/ (Employee cost + Manpower cost on hiring) ROCE = LTM EBIT/ Average tangible capital employed
ROE = LTM PAT/ Average tangible net worth
Net Debt to EBITDA = Short-term & long-term debt less cash, bank balances & mutual fund investments / LTM EBITDA
4) 5) Working Capital Turnover = LTM Revenue/ Average net working capital
Fixed asset turnover = LTM Revenue/ Average Tangible net block
6) 7) Mar-20 numbers are based on pro-forma financials 8)
RoCE and RoE for earlier years have been recalculated due to merger
22
Q&A
New Product Development Discussion
Appendix
Inside view of our manufacturing plant at Manesar, Haryana
One Vision To become one of the World’s most Respected and Valuable Auto Technology companies for our Customers, Employees & Shareholders.
25
Our story so far…
Phase - 1
• 18 Customers • 2 Plants • 1 Product
Revenue in INR millions
FY99 – FY22 Avg EBITDA margin 26.4% Revenue CAGR 36.6% Industry CAGR 8.9%
Phase - 2
• 22 Customers • 2 Plants • 2 Products
Phase - 3
• Acquisition of Comstar • 47 Customers (37+10) • 9 Plants (5+4) • 10 Products (5+5)
Phase - 4
• Started journey as public company
• 60 customers • 9 plants • 13 products
23,568
*Q1FY23 Annualized
21,306
FY17– FY22 Avg. EBITDA margin 27.4% Revenue CAGR 34.2% Industry CAGR 1.4%
12,201
15,663
FY12– FY16 Avg. EBITDA margin 25.0% Revenue CAGR 10.6% Industry CAGR 1.7%
2,807
2,616
3,309
3,456
3,653
6,992
6,088
5,033
5,892
Q1FY23
FY99– FY11 Avg. EBITDA margin 21.5% Revenue CAGR 50.6% Industry CAGR 14.6%
697
910
1,135
1,348
1,174
1,492
2,207
16
9 9 Y F
120
223
183
221
0 0 Y F
1 0 Y F
2 0 Y F
3 0 Y F
399
4 0 Y F
Notes: 1. 2.
FY20 onwards financials include Comstar Industry data source: SIAM
5 0 Y F
6 0 Y F
7 0 Y F
8 0 Y F
9 0 Y F
0 1 Y F
1 1 Y F
2 1 Y F
3 1 Y F
4 1 Y F
5 1 Y F
6 1 Y F
7 1 Y F
8 1 Y F
9 1 Y F
0 2 Y F
1 2 Y F
2 2 Y F
* 3 2 Y F
26
Guided by Values
Agility
34.2%
Growth
5-year Revenue
CAGR
Vitality
Integrity
Frugality
27.4%
Margins
5-year Avg.
EBITDA
>28%
Returns ROE
Each Year
(FY17-FY22)
27
Established Global Presence to Serve Customers Locally
USA Location
Capacity3
Tecumseh, MI 1 mn starter motors
Ypsilanti, MI
Belgium
Genk
Sweden
Gothenburg
Germany
Cologne
China Location Capacity3
Hangzhou 1 mn starter motors
7 of the world’s top 10 PV OEMs1
3 of the world’s top 10 CV OEMs2
7 of the world’s top 8 tractor OEMs2
Irapuato 1 mn starter motors
India
Location Capacity3
Mexico Location Capacity3
9 3
1 8 1
Manufacturing Plant
R&D Centre
Tool & Die Shop
Warehouse
International Sales Office
Notes: 1. 2. 3.
Source: BofA, Company Analysis Source: Ricardo report Capacity as of March 2022
Gurugram 31.9 mn gears
Manesar
1.2 mn differential assemblies
Pune
9.3 mn gears
Chennai
3.8 mn starter motors 0.15 mn traction motors
Hosur, Sanand, Rudrapur, Mehsana
28
Product Summary
Belt Starter Generator
Starter Motor
Differential Bevel Gears
Passenger Vehicles
Starter Motor*
Off Highway Vehicles
Differential Assembly
43
2
1
4
3
1
2
Differential Assembly
Reverse Idler
Inter-Axle Gear Set
Coupling/ Sleeves
Differential Bevel Gears
Portal Axle Gears
Differential Bevel Gears
Starter Motor*
Commercial Vehicles
5
Epicyclic Geartrain/Gears
1
2
3
4
* Product under development
29
Product Summary
Controller
Electric 2-Wheelers
Drive Motor (PMSM)
Differential Bevel Gears
Traction Motor* (PMSM)
Electric Cars
Hub Wheel Motor (BLDC)
1
3
2
3
4
6
5
Drive Motor (PMSM)
Electric 3-Wheelers
1
2
5
Spool Gears
Epicyclic Geartrain
e-Axles
1
2
3
Controller*
Integrated Motor Controller Module (for Predictive Active Suspension)
Differential Assembly
* Product under development
Controller
30
Electrification: Our Approach to Market
Power Rating
Vehicle Segment
Geography
Products
Driveline Business Core Strength: High Torque - High Power Density
350-600kw
BEV High Performance
100-350kw
BEV Performance
U.S., Asia, Europe, India
Epicyclic Geartrain
Spool Gears
50-100kw
BEV
PHEV
EDL
Final Drive assembly
Differential assemblies
Differential gears
Motor Business (next phase; 2020-23)
30-50kw
PHEV
15-30kw
MHEV
5-15kw
E-3 Wheeler
Motor Business Core Strength: Low Voltage - High Power Density
India, China, Europe
India
BSG
PMSM motors
Motor controllers
PHEV Starter Motors
<5kw
E-2 Wheeler
SRM motors
BLDC drive motors
Wheel hub BLDC motor
PMSM motors
Motor controllers
e-Axle
31
Revenue share from BEV has grown 22x over 4 years, with absolute BEV revenue growth at 37x
Revenue from BEV (%)
BEV Segment Revenue (Rs. mn)
22x
13.8%
1.3%
2.0%
1.2x
28.9%
24.8%
37x
6,508
*Q1FY23 Annualized
1.3x
5,042
2,057
174
234
1,627
Q1FY23
FY19
FY20
FY21
FY22
Q1 FY23
FY19
FY20
FY21
FY22
FY23*
32
Market Shares for Differential Gears and Starter Motors
Global Market Share of Differential Gears1
Global Market Share of Starter Motors1
While we continue to dominate the Indian market for Differential Gears
CY19
4.5%
CY20
5.0%
CY21
6.3%
CY19
2.5%
CY20
3.0%
CY21
4.6%
Passenger Vehicles
Commercial Vehicles
Tractors
55-60%2
80-90%2
75-85%2
Notes: 1. 2.
As per Ricardo report; starter motor market share across light vehicles As per CRISIL report dated Feb 2021
33