PRICOLLTDNSEQ2 FY2314 November 2022

Pricol Limited

7,282words
127turns
15analyst exchanges
1executives
Management on call
Anuj Sonpal from Valorem Advisors. Thank you and over to you sir. Anuj Sonpal
Thank you Michelle. Good afternoon everyone and a very warm welcome to you all. My name
Key numbers — 40 extracted
INR 55.01
he height ever you in the history of Pricol at INR. 480.17 Cr. for Q2 of FY23. The EBITA stood at INR 55.01 Cr., and in terms of percentage it was 11.46%. We have to mention here that the strong headwinds
11.46%
R. 480.17 Cr. for Q2 of FY23. The EBITA stood at INR 55.01 Cr., and in terms of percentage it was 11.46%. We have to mention here that the strong headwinds continue to be there in Q2 as well with the FO
INR 82
e that the strong headwinds continue to be there in Q2 as well with the FOREX going to as high as INR 82 and you know that many of components used by Pricol are import dependent. So, we have strong headw
INR 500 crore
quarters as well. Barring that we have done 11.46%. On a consolidated basis, we have crossed the INR 500 crore mark, we are at INR 501. EBITA stood at INR 65 Cr. and the EBITA margin on the consolidated lev
INR 501
t we have done 11.46%. On a consolidated basis, we have crossed the INR 500 crore mark, we are at INR 501. EBITA stood at INR 65 Cr. and the EBITA margin on the consolidated level worth 12.97%. At the co
INR 65
n a consolidated basis, we have crossed the INR 500 crore mark, we are at INR 501. EBITA stood at INR 65 Cr. and the EBITA margin on the consolidated level worth 12.97%. At the consolidated level long te
12.97%
we are at INR 501. EBITA stood at INR 65 Cr. and the EBITA margin on the consolidated level worth 12.97%. At the consolidated level long term borrowing was nil, inclusive of FY23. During the same period
INR 142.45
el long term borrowing was nil, inclusive of FY23. During the same period of last year, it was at INR 142.45 Cr.. The key financial highlights for Q2FY23 have been that when compared to the previous year s
27.70%
ighlights for Q2FY23 have been that when compared to the previous year same time we have grown by 27.70% on a standalone basis. The PBT has grown by 61.41%. The cash profit has doubled when compared to
61.41%
o the previous year same time we have grown by 27.70% on a standalone basis. The PBT has grown by 61.41%. The cash profit has doubled when compared to the same period last year, and the profit after tax
150%
oubled when compared to the same period last year, and the profit after tax has grown by close to 150%. On a consolidated basis, the similar percentage of growth you can see that 26.64% was the growth
26.64%
rown by close to 150%. On a consolidated basis, the similar percentage of growth you can see that 26.64% was the growth when compared to the last year. The profit before tax was at 81.34%. The cash prof
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Guidance — 20 items
P. M. Ganesh
opening
“We expect the same trend to continue for a few more quarters as well.”
P. M. Ganesh
qa
“We are confident that we will be able to sustain this 10% and grow up to 20% in the next two years’ time.”
Jinesh Gandhi
qa
“Okay, so the 10% growth in exports will be in second quarter or first half?”
Jinesh Gandhi
qa
“Right and this you expect to increase to 20% in the next two to three years?”
P. M. Ganesh
qa
“So, we anticipate that there could be some delays happening because of the start of new programs, but the mission of the company is that we should be at a 20% export in the next two to three years’ time.”
Jinesh Gandhi
qa
“With respect to imports, how imports will be as a percentage of sales for us?”
Jinesh Gandhi
qa
“Imports, can you give clear of imports as a percentage of sales, how much it will be for us?”
Vipul Shah
qa
“What will be the margin profile for both the vertical?”
Siddharth Manoharan
qa
“May be it would to be difficult for us to quantify the exact numbers, but we know that Caterpillar is a global leader, and the off-road vehicle and the orders is quite sizable, since we have an NDA with Caterpillar, we are not able to disclose the exact value, but it will be quite significant as we are going along.”
Nidhi Babaria
qa
“Okay, and sir can you elaborate a bit more on export products like what are the upcoming products which we will be focusing and how is our like current products doing in export market like the major products not the all…”
Risks & concerns — 14 flagged
Of course, we are seeing some slowdown in the US and Europe, thereby it has impacted the export in a very minor way, but not to be really concerned at this point of time, because we have been winning lots of export business as well.
— P. M. Ganesh
We have highlighted during last call that we have started the production for Caterpillar, which has been supporting us to offset some of the slowdown in the industry, both in the US and Europe market.
— P. M. Ganesh
Yeah, but it all depends upon again the industry situation as you know that US and Europe has gone into a little bit of slowdown at this point of time.
— P. M. Ganesh
The percentage would be very difficult for me to say because it varies from product to product, but overall, there has been an increasing trend in terms of imports primarily because of the electronic content which is there in the Driven Integration System.
— P. M. Ganesh
The second question which is on the tax, the tax impact of INR 15.5 Cr.
— Mr. Priyadarsi Bastia
May be it would to be difficult for us to quantify the exact numbers, but we know that Caterpillar is a global leader, and the off-road vehicle and the orders is quite sizable, since we have an NDA with Caterpillar, we are not able to disclose the exact value, but it will be quite significant as we are going along.
— Siddharth Manoharan
In terms of percentages be very difficult for me to make a statement.
— P. M. Ganesh
See as we explained in the previous call that we are back protected with our customers in terms of both commodity and products okay, but unfortunately, what is happening is the rate of increase of… rather the strengthening of dollar has been very steep in terms of week to week basis, with a lot of import content in the product whatever we offer to the customers, it would be very difficult for the customer to compensate you on a weekly basis.
— P. M. Ganesh
It will be very difficult for me to comment on that because there has been a lot of fluctuations both in the raw material and FOREX, and you know semiconductor shortages have also been a perennial problem.
— P. M. Ganesh
So, if you ask me it has been highly volatile in the semiconductor pricing in terms of premium price that we have to bring into the semiconductors and then on the FOREX fluctuations and raw material fluctuations.
— P. M. Ganesh
So it will be very difficult for me to tell you about the percentage going forward, but you can see that yeah, we have been managing on despite these strong headwinds, primarily because of our new product and new technology, whatever we are offering in the market.
— P. M. Ganesh
Nidhi, it would be difficult for us to quantify at this point of time, but as we explained to you every EV vehicle is fitted with a telematics unit primarily to monitor the performance of the vehicle including the battery.
— P. M. Ganesh
Once you find that this stage will be difficult.
— P. M. Ganesh
It would be very difficult to quantify the CAPEX, as I told you there, there is not a really sharp increase in CAPEX because it quite commensurate to the rate in which we are growing.
— P. M. Ganesh
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Q&A — 15 exchanges
Q
Hi Sir. A few questions from my side. Firstly, how has been trending our exports, we hear about abroad based pressures on exports across, players in auto components as well as auto OEM side, are we also seeing similar trends?
P. M. Ganesh
Jinesh our export has been at 10% of the total revenue quarter on quarter. Of course, we are seeing some slowdown in the US and Europe, thereby it has impacted the export in a very minor way, but not to be really concerned at this point of time, because we have been winning lots of export business as well. We have highlighted during last call that we have started the production for Caterpillar, which has been supporting us to offset some of the slowdown in the industry, both in the US and Europe market. We are confident that we will be able to sustain this 10% and grow up to 20% in the next tw
Q
Hi sir. Congratulations, for the good set of numbers. So, my question is related to vertical Driver Information System and actuation control and fluid management. So, can you split the turnover between the two if that is possible?
P. M. Ganesh
Yeah, it is approximately 70 and 30, 70% is from the Driver Information System and 30% is from the fluid control and actuation. What will be the margin profile for both the vertical? Fluid control systems or more into the exports. Their margins would be little better than the Driver Information System which is predominantly into the domestic Okay sir. I have further questions, but I will join the queue. Thank you. Thank you.
Q
Yeah, sir. I have two questions. One is on the other expenditure, which have gone up from INR 20 Cr. to INR 30 Cr., are there any one-time items in this or it's the general uptrend, that is my first question. Second question is you said that change of tax regime have made a change of INR 15-1/2 Cr. difference in the tax expenditure. Can you break that into current tax and deferred tax?
P. M. Ganesh
Yeah, Mr. Naidu I request to my colleague, Mr. Priyadarsi, CFO to answer both your questions. Mr. Naidu to answer your first question on another expenditure, there is no one time nature of expenditure, which has been captured in the quarter. It is all in the regular nature. The second question which is on the tax, the tax impact of INR 15.5 Cr. which you said that we have shown in Q2, that is, the majority of it is coming from deferred tax because of the tax regime change and the balance is the current year My first question still portion is there, 20 Cr. to 30 Cr. is a 50% increase? So what c
Q
Hi and thank you for taking my question. So the exceptional item in this year which we have booked is there any more part of the erstwhile subsidiary which is expected to come in the coming quarters?
P. M. Ganesh
I will ask Siddharth, Director of Strategy to answer the question please. Thank you. Miss Nidhi, I think we have recovered almost all the claims that are due to us and I think at this point in time, we don't see any more exceptional items coming in the upcoming quarter. Okay, and if you can quantify the opportunity for PSA and Caterpillar Book which we have got, orders which we are expecting like the production which have started in this quarter. May be it would to be difficult for us to quantify the exact numbers, but we know that Caterpillar is a global leader, and the off-road vehicle and t
Q
Okay. Yeah, thank you.
Management
Q
Hi, sir just wanted to understand your guidance for the next two years, maybe FY 25, where do you see the company moving towards because after very long, we are consistently profitable for a number of quarters now, and even on a PBT level if we see that we kind of the mark of the INR 70-80 crore this year. Even if you remove the exceptional item just looking from a broad PBT level. So just wanted to know, what kind of growth are you looking for the next two years, and where do you… if you have anything in mind internally as a target, where can we see Pricol moving towards because you have this
P. M. Ganesh
Vinayak, pardon me if I don't make any forward-looking statements, how do we look in terms of our profitability for the next two years, but barring that, I can tell you that definitely we are in the growth path primarily because of our new technology products. Whatever we are seeing in the market. We have gone upstream in terms of value add into our Driver Information System. You know that a few years back we were only in the mechanical type of instrument clusters, we have migrated to LCD instrument clusters and thereby we have moved into electric integration TFT clusters. This is how the tech
Q
Hi, my question was on the products FOREX volatility given our input content in DIS, so how will that priced to customers, is it direct pass through the lag or we have to negotiate on a timely basis? Can you throw some light on that?
P. M. Ganesh
Jinesh a good portion of it, we are indexed with the customers back-to-back, with all our customers, okay? Okay. So, the FOREX is not going to impact the company in the long term, of course, there will be a lag of three to six months because that is how the customers operate, the OEMs operate. What happens is the dollar has been very sharp in terms of the escalation against Indian rupee in the last like six, seven weeks as you can see. So both types of foreign impact could affect a quarter, but barring that, in terms of the back to back engagement, I think we are quite well protected in terms
Q
Hi. Thank you for taking my question. Could you give us some breakup in terms of two- wheelers, personal passenger vehicles and commercial vehicle?
P. M. Ganesh
Anirudh if you ask me on the total portfolio, 65% of our revenue comes from the two-wheeler segment that is how the manufacturing in India happens. For example, if 30 million vehicles are produced in a year, I am talking about a normal year, 20 million of those are of Two wheeler, so that is where we are in terms of our revenue. So, 65% of our business of the total pie comes from the Two-Wheeler segments. As we know that into the personal passenger vehicle we have started into Tata Motors three years back, and we have been growing good with them, that is what car customers after we had the joi
Q
Okay. Thank you.
Management
Q
Hi sir, can you comment on our recent partnership with Sibros and BMS, how they are going to help us in increasing our market share, what type of products they are offering, products and services? Your brief comments will be welcome, and second there is an exceptional item of I think INR 9.75 Cr., so what is that about?
Management
Vipul, the first part of the question, I will request my colleague Siddharth, Director of Strategy to explain to you about the partnership and what are the things that we are looking forward in the future in terms of the partnership? And the second part of the question, I will request my colleague, the CFO of the company, Priyadarsi to take. Over to you Siddharth. Thank you. Mr. Shah on both the partnerships… number one with the Sibros for end-to-end solution on the telematics front, and secondly, on the battery management system with BMS powersafe. Both the partnership has been well received
Q
Thank you for the follow up question. First, I just wanted to understand like, how can we quantify the Sibros opportunity and even on telematics side, like we have been in the industry like we were the early players in the industry, so what helps us you know, versus the all-new age peers which are now entering the market?
P. M. Ganesh
Nidhi, it would be difficult for us to quantify at this point of time, but as we explained to you every EV vehicle is fitted with a telematics unit primarily to monitor the performance of the vehicle including the battery. An update is that we have now started developing telematics for the battery pack companies also. The recent venture has been with sun mobility for developing telematics for their battery pack, so as you know for EV vehicle telematics is mandatory to monitor vehicle performance, with the EV vehicles growing and expected to exponentially grow in the further months. We expect t
Q
Your thanks for the opportunity again. Just a couple of questions, one is on CAPEX for the core business in first half was about INR 23 Cr., do we expect similar run-rate for H2FY23 or it should further increase in the opportunities which we have faced?
P. M. Ganesh
Jinesh as I told you, it is commensurate with the business growth. We continue to do backward integration, which is going to help improve our profitability. As we are going into the electronic driver information system, there is a need for us to do a lot of backward integration in terms of populating our own PCB. So, we do the PCB manufacturing ourselves, and we are expanding those portfolios so it improves efficiency of operations. It would be very difficult to quantify the CAPEX, as I told you there, there is not a really sharp increase in CAPEX because it quite commensurate to the rate in w
Q
Would you please comment a little on PLI scheme which is applicable for our products. Like which or what part of the turnover will be covered under this, and which are the products actually covered on this a little more insight into that?
P. M. Ganesh
Yeah, I will request my colleagues Siddharth, Director of Strategy to explain this. Mr. Naidu, so Pricol has been selected by the Ministry and has been approved for the PLI scheme. So, we have applied for many of our products from our portfolio which are eligible for this scheme for example, telematics on your drive it is your gateway devices, so on and so forth. But, at this point in time, the Ministry is still evaluating and certifying the products and there is a process to be followed and there has not been any clarity from the ministry’s angle on what products have been qualified, because
Q
Sir what is our average content for Driver Information System in two-wheeler and four- wheeler?
P. M. Ganesh
Sorry Vipul, can you please elaborate your question please. In rupee terms what should be your content for Driver Information System in an average two- wheeler and an average four-wheeler, Sir? If you can quantify? Today see adaptation basically of the two-wheeler starts from four-wheeler, but if you see few years back, Four-wheeler had already started adopting the technology of touchscreen and then going for larger displays and they had gone in for TFT type of clusters. Now you find that two- wheeler also has started adopting the technology. Primarily it starts from four-wheeler and then goes
Q
Thank you all of you once again for participating in this call. Thank you so much.
Management
Speaking time
P. M. Ganesh
36
Jinesh Gandhi
19
Moderator
17
Nidhi Babaria
12
Vipul Shah
11
Siddharth Manoharan
8
Anirudh Singhi
7
Mr. Naidu
5
Vinayak Mohta
4
Management
4
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Opening remarks
Anuj Sonpal
Thank you Michelle. Good afternoon everyone and a very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the investor relations for Pricol Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the second quarter and our financial year 2023. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's con call may be forward looking in nature. Such forward looking statements are subject to risks and uncertainties which could cause actual results to differ from those anticipated. Such statements which are based on management's beliefs as well as assumptions made by an information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements and to make any investment decisions. The purpose of today's earnings call is purely to educate and bring awareness about the company's fundamental bu
P. M. Ganesh
Good afternoon to all of you and welcome to the Earnings Conference Call for Q2 FY 23. I will go straight into the financials of Q2 of FY23. The operations have been at the height ever you in the history of Pricol at INR. 480.17 Cr. for Q2 of FY23. The EBITA stood at INR 55.01 Cr., and in terms of percentage it was 11.46%. We have to mention here that the strong headwinds continue to be there in Q2 as well with the FOREX going to as high as INR 82 and you know that many of components used by Pricol are import dependent. So, we have strong headwinds because of FOREX depreciation and the semiconductor shortage continues in Q2 as well. We expect the same trend to continue for a few more quarters as well. Barring that we have done 11.46%. On a consolidated basis, we have crossed the INR 500 crore mark, we are at INR 501. EBITA stood at INR 65 Cr. and the EBITA margin on the consolidated level worth 12.97%. At the consolidated level long term borrowing was nil, inclusive of FY23. During the
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