Sona Blw Precision Forgings Limited has informed the Exchange about Investor Presentation
Q2 & H1 FY23 Earnings Presentation
28 October 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
Q2 FY23 Financial Performance Highlights
6,574 mn | 12%
1,657 mn | 7%
925 mn | 5%
Revenue | YoY Growth
EBITDA | YoY Growth
PAT | YoY Growth
25.2% EBITDA Margin
14.1% PAT Margin
1,310 mn | 6%
BEV Revenue | YoY Growth
21% Q2 FY23 Revenue Share
from BEV
4
H1 FY23 Financial Performance Highlights
12,466 mn | 15%
3,082 mn | 5%
1,684 mn | 5%
Revenue | YoY Growth
EBITDA | YoY Growth
PAT | YoY Growth1
24.7% EBITDA Margin
13.5% PAT Margin
27.7%
RoCE2
27.3%
RoE3
Notes: 1. 2. 3.
Calculated after excluding exceptional income of Q1 FY22 ROCE = LTM EBIT/ Average tangible capital employed ROE = LTM PAT/ Average tangible net worth
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
25%
2,937 mn
33%
H1 FY23 Revenue Share
H1 FY23 BEV segment
H1 FY23 BEV revenue
from BEV
revenue
YoY growth
36 (10+26)1
EV Programs1 awarded across
23 customers as at the end of
Q1 FY23
+1
37 (10+27)1
EV Programs1 awarded across
23 customers as at the end of
Q2 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
37 EV programs across 231 different customers
No. of programs customers
20 10
3
3
-
-
7
3
6
3
4
4
-
-
North America 4 Customers 3 9
6
9
Europe2 5 Customers 1 6
7 2
7
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
17
+1
India 13 Customers 4 7
13 7
3
+x denotes the change during Q2 FY23
Notes: 1. 2.
2 customers are present in more than one geography Europe geography includes the UK
9
Our Strategic Priorities
Electrification
Global Market Significance
Diversification
Technology
10
Our net order book1 is Rs. 205 billion (9.6x FY22 revenue)
205 bn
Orderbook at the end of Q1 FY23
4 bn
Orders consumed from matured and ramp-up programs during Q2 FY23
4 bn
Orders added for programs won in Q2 FY23
205 bn
Orderbook at the end of Q2 FY23
EV Rs. 140 Billion (68%)
Non-EV Rs. 65 Billion (32%)
# of Programs
# of Customers
57% 15 8
PV
10% 8 7
1% 4 4
13% 28 13
11% 19 8
7% 44 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.
11
Our Strategic Priorities
Electrification
Global Market Significance
Diversification
Technology
12
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 H1 FY23
FY20
FY21
FY22
H1 FY23
2%
29%
42%
27%
14%
27%
34%
25%
25%
26%
31%
18%
25%
21%
37%
17%
Battery EV
Micro-hybrid / Hybrid
Powersource Neutral
ICE Dependent
13
Diversified Revenue Mix
By Geography
1%
18%
By Product
1% 1%
3%
33%
17%
27%
22%
FY22
FY22
26%
7%
1%
18%
42%
H1 FY23
25%
17%
4% 2%
4%
26%
21%
H1 FY23
32%
31%
By Vehicle segment
PV
H1 FY23
FY22
68%
16%
15%
CV
OHV
67%
14%
15%
4%
14
21%
1.5%
E2W/E3W
Our Strategic Priorities
Electrification
Global Market Significance
Diversification
Technology
15
We have introduced one new product to the market in Q2 and added five more in the technology roadmap Electric
Autonomous /Connected
Motors for Bots and Industrial Automation
GaN Inverter
Liquid Cooled Inverter
ADAS Sensors
Integrated Controller with DC- DC Converter
High Voltage Inverter
Magnet-free Motors, EMSM and SRM designs
High Voltage Traction Motors
Integrated P4 e-Axle
Predictive Active Suspension Integrated Motor Controller Module
Low Voltage Inverter
Mid-mount Drive Motor (PMSM)
Hub Wheel Motor (BLDC)
Belt-driven Starter Generator (BSG)
Rigid e-Axle
Axial Flux Motors
Reduction Drive Unit
EV Rotor Shaft
EDL
Helical Gears
Independent suspension e- Axle
Epicyclic Set
Park Gear
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
16
Diff Gears
Starter Motors
Spool Gear
Diff Assembly
Net Spiral Bevel Gears
Active Biased Differential
Non-ferrous Parts
New product additions in the roadmap are mentioned in blue text
Q2 FY23 Financial Update
Our final drive gears
Q2 FY23 Financials
1 Revenue (Rs. mn)
BEV
YoY: 12%
6,574
5,857
EBITDA (Rs. mn)
EBITDA Margin (%)
PAT (Rs. mn)
PAT Margin (%)
YoY: 7%
1,657
1,544
YoY: 5%
925
882
1,239
1,310
26.4%
25.2%
15.1%
14.1%
Q2 FY22
Q2 FY23
Q2 FY22
Q2 FY23
Q2 FY22
Q2 FY23
o BEV Revenue higher by 6% and constitutes
21% of total revenue
o Non-BEV Revenue grew by 14% while light vehicle sales in our top-3 markets (North America, India, and Europe) grew by only 4%
o YoY drop of ~1.2% in EBITDA Margin is largely due to increase in RM prices because of “arithmetic effect” despite material price passthrough
o Sequentially, EBITDA margin improved by 100
bps
o PAT margin impacted due to margin
transmission from EBITDA to PAT
Notes: 1.
Revenue includes net gain from foreign exchange
18
H1 FY23 Financials
1 Revenue (Rs. mn)
BEV
YoY: 15%
12,466
10,864
EBITDA (Rs. mn)
EBITDA Margin (%)
PAT (Rs. mn)
PAT Margin (%)
YoY: 5%
3,082
2,931
YoY: -1%
1,705
YoY: 5%
1,684
1,606
2,206
2,937
27.0%
24.7%
15.7%
14.8%
13.5%
H1 FY22
H1 FY23
H1 FY22
H1 FY23
H1 FY22
H1 FY22 (adj)
2
H1 FY23
o BEV Revenue higher by 33% and constitutes
25% of total revenue
o Non-BEV Revenue grew by 10% despite decline of 6% in light vehicle sales in our top- 3 markets India, and (North America, Europe)
o Drop of ~2.3% in EBITDA Margin is largely due to increase in RM prices because of “arithmetic effect” despite material price passthrough
o Adjusted PAT
for H1 FY22 has been
adjusted for IPO expenses
o Impact of higher depreciation: ~(30 bps) o Impact of lower finance cost: ~70 bps
Notes: 1. 2.
Revenue includes net gain from foreign exchange Includes Q1 FY22 adjusted PAT as shown on page no. 34 of Q1 FY22 earnings presentation
19
FCFO of INR 649 mn in H1 FY23
Numbers in Rs. mn
Opening Cash as on 1st April 2021
Net cash flow from operating activities
Net cash flow from investing activities
Net cash flow from financing activities
Closing Cash as on 31st March 2022
EBITDA
∆ Working capital
Tax paid
Others
3,082
(641)
(414)
280
Capex
(1,658)
Investments
(1,203)
Others
(47)
Net loan drawn
Dividend
Others
1,070
(450)
(80)
20
Key Ratios
VA/Employee cost
5.1
5.2
5.7
6.2
RoCE (%)
RoE (%)
36.1% 32.4%
28.8%
27.7%
30.4%
34.6% 36.3%
27.4%
Mar-20 Mar-21 Mar-22 Sep-22
Mar-20 Mar-21 Mar-22 Sep-22
Mar-20 Mar-21 Mar-22 Sep-22
Net Debt to EBITDA
Working Capital Turnover
Fixed Asset Turnover
3.9
3.9
3.9
3.8
4.6
5.0
4.7
3.9
0.76
0.43
(0.01)
(0.04)
Mar-20 Mar-21 Mar-22 Sep-22
Mar-20 Mar-21 Mar-22 Sep-22
Mar-20 Mar-21 Mar-22 Sep-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
21
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.
24
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)
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
Phase - 4
• Started journey as public company
• 60 customers • 9 plants • 13 products
24,932
*H1 FY23 Annualized
21,306
12,466
H 1FY23
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
25
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)
26
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
27
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
28
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
29
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
30
Revenue share from BEV has grown 22x over 4 years, with absolute BEV revenue growth at 34x
Revenue from BEV (%)
BEV Segment Revenue (Rs. mn)
19x
14%
1.3%
2.0%
25%
25%
34x
5,874
*H1 FY23 Annualized
5,042
2,057
2,937
H 1FY23
174
234
FY19
FY20
FY21
FY22
H1 FY23
FY19
FY20
FY21
FY22
FY23*
31
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
32
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 @15%
After RM price increase
100.00
45.00
55.00
55.0%
+6.75
+6.75
-
350 bps
106.75
51.75
55.00
51.5%
Ceteris paribus, 15% RM price increase should lead to 350 bps margin decline even with 100% RM cost passthrough
33