SONACOMSNSE24 January 2023

Sona Blw Precision Forgings Limited has informed the Exchange about Investor Presentation

Sona BLW Precision Forgings Limited

Q3 & 9M FY23 Earnings Presentation

24 January 2023

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.

Our Management

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

Q3 FY23 Financial Performance Highlights

6,850 mn | 39%

1,862 mn | 43%

1,071 mn | 45%

Revenue | YoY Growth

EBITDA | YoY Growth

PAT | YoY Growth1

27.2% EBITDA Margin

15.6% PAT Margin

1,733 mn | 29%

BEV Revenue | YoY Growth

26% Q3 FY23 Revenue Share

from BEV

Notes: 1.

Excluding exceptional income of Q3 FY22

9M FY23 Financial Performance Highlights

19,316 mn | 22%

4,944 mn | 17%

2,755 mn | 18%

Revenue | YoY Growth

EBITDA | YoY Growth

PAT | YoY Growth1

25.6% EBITDA Margin

14.3% PAT Margin

CY21

CY22

CY21

CY22

6.3%

7.2%

4.6%

4.1%

Global Market Share of Differential Gears2

Global Market Share of Starter Motors3

Notes: 1. 2. 3.

Excluding exceptional income of Q1 & Q3 FY22 As per Ricardo’s market size estimates for CY21 & CY22 Across light vehicles; as per Ricardo’s market size estimates for CY21 & CY22

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

Sizeable and Increasing Presence in EVs

25%

4,670 mn

31%

9M FY23 Revenue Share

9M FY23 BEV segment

9M FY23 BEV revenue

from BEV

revenue

YoY growth

37 (10+27)1

EV Programs1 awarded across

23 customers as at the end of

Q2 FY23

41 (10+31)1

EV Programs1 awarded across

25 customers as at the end of

Q3 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)

41 EV programs across 251 different customers

No. of programs customers

22 10

North America 4 Customers 3 11

Europe2 5 Customers 1 5

6 2

Asia 4 Customers 2 2 3 1

Programs in serial production

Programs in orderbook

Programs for geartrain components

Programs for traction motors, IMCM and PHEV starters

Programs for e-Axle

India 15 Customers 4 7

15 9

+x denotes the change during Q3 FY23

Notes: 1. 2.

2 customers are present in more than one geography Europe geography includes the UK

2 significant EV program wins in Q3 along with the introduction of a new EV product

Electronically Locking Differential for Electric SUVs

Differential Assembly for Electric Cars

Global OEM of EVs

US-European OEM of PVs & EVs

₹ 33,500 mn

addition in our orderbook

H2 FY24

SOP Year

₹ 3,600 mn

addition in our orderbook

H2 FY24

SOP Year

Electrification: Our Approach to Market

Power Rating

> 600 kW

300 – 600 kW

100 – 300 kW

40 – 100 kW

15 – 40 kW

5 – 15 kW

<5 kW

Driveline Solutions

Core Strength: High Torque, High Power Density

Commercial

Personal

EV Products

Motor Solutions

Core Strength: Low Voltage, High Power Density

Personal

Commercial

Epicyclic Geartrain

Spool Gears

EDL

Final Drive assembly

Differential assemblies

PHEV Starter Motors

Differential gears

SRM Motor

Controllers

E-Axles

Drive Motors

Hub-wheel Motors

In serial production or in orderbook

To be added between CY23-25

Our Strategic Priorities

Electrification

Global Market Significance

Diversification

Technology

With new wins of ₹42 billion our net order book1 grows to ₹238 billion (11.2x FY22 revenue)

205 bn

Orderbook at the end of Q2 FY23

9 bn

Orders consumed from matured and ramp-up programs during Q3 FY23

42 bn

Orders added for programs won in Q3 FY23

238 bn

Orderbook at the end of Q3 FY23

EV Rs. 174 Billion (73%)

Non-EV Rs. 64 Billion (27%)

# of Programs

# of Customers

64% 17 8

8% 10 9

1% 4 4

10% 29 13

11% 23 8

6% 44 16

2W &3W

CV &OHV

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.

We are supplying to most of the major global OEMs

7 of the world’s top 10 PV OEMs1a

5 of the world’s top 15 EV OEMs1c

3 of the world’s top 10 CV OEMs1b

4 of the Indian top 15 Indian e-2-Wheeler OEMs1d

7 of the world’s top 10 tractor OEMs1b

Global Market Share of Differential Gears2

Global Market Share of Starter Motors2

CY19

4.5%

CY20

5.0%

CY21

6.3%

CY22

7.2%

CY19

2.5%

CY20

3.0%

CY21

4.6%

CY22

4.1%

Notes: 1. 2.

Data Source: a) BofA Global Automobiles Report; b) Ricardo Report; c) EV-Volumes; d) Vahan Database; Company Analysis As per Ricardo’s market size estimates; starter motor market share across light vehicles

Our Strategic Priorities

Electrification

Global Market Significance

Diversification

Technology

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 9M FY23

FY20

FY21

FY22

9M FY23

29%

42%

27%

14%

27%

34%

25%

26%

31%

18%

25%

20%

38%

17%

Battery EV

Micro-hybrid / Hybrid

Power source Neutral

ICE Dependent

Diversified Revenue Mix

By Geography

18%

By Product

1% 1%

33%

17%

27%

22%

FY22

26%

25%

3% 2%

26%

23%

18%

45%

17%

9M FY23

29%

32%

By Vehicle segment

FY22

68%

16%

15%

9M FY23

OHV

69%

14%

13%

20%

1.5%

3.5%

E2W/E3W

Our Strategic Priorities

Electrification

Global Market Significance

Diversification

Technology

We have introduced one more product to the market

Autonomous /Connected

Electric

GaN Inverter

Integrated Controller with DC-DC Converter

Liquid Cooled Inverter

High Voltage Inverter

Motors for Bots and Industrial Automation

High Voltage Traction Motors

Integrated P4 e-Axle

Magnet-free Motors, EMSM and SRM designs

ADAS Sensors

Predictive Active Suspension Integrated Motor Controller Module

Low Voltage Inverter

Mid-mount Drive Motor (PMSM)

Hub Wheel Motor (BLDC)

Reduction Drive Unit

Axial Flux Motors

EV Rotor Shaft

Belt-driven Starter Generator (BSG)

Rigid e-Axle

EDL

Independent suspension e-Axle

Helical Gears

Epicyclic Set

Park Gear

Diff Gears

Starter Motors

Spool Gear

Diff Assembly

Net Spiral Bevel Gears

Active Biased Differential

Non-ferrous Parts

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

Q3 FY23 Financial Update

Our final drive gears

Q3 FY23 Financials

1 Revenue (Rs. mn)

BEV

YoY: 39%

6,850

4,941

1,305

1,349

1,733

26.4%

27.2%

EBITDA (Rs. mn)

EBITDA Margin (%)

PAT (Rs. mn)

PAT Margin (%)

YoY: 43%

1,862

YoY: 24%

YoY: 45%

1,071

864

738

17.5%

14.9%

15.6%

Q3 FY22

Q3 FY23

Q3 FY22

Q3 FY23

Q3 FY22 Q3 FY22 (adj) Q3 FY23

o Highest ever BEV revenue o Up 29% YoY o 26% of total revenue

o Non-BEV Revenue grew by a robust 42% while light vehicle sales in our top-3 markets (North America, India, and Europe) grew by only18%

Notes: 1. 2.

Revenue includes net gain from foreign exchange Excluding exceptional income

o EBITDA Margin is higher by ~0.8% mainly due

to product mix

o PAT margin improved to 15.6% due to

higher EBITDA margin

o Gain from operating leverage has impact of higher RM

helped offset prices

o Sequentially, EBITDA margin has improved by

~200 bps

9M FY23 Financials

1 Revenue (Rs. mn)

EBITDA (Rs. mn)

EBITDA Margin (%)

PAT (Rs. mn)

PAT Margin (%)

BEV

YoY: 22%

15,806

19,316

4,237

YoY: 17%

4,944

YoY: 7%

2,569

YoY: 18%

2,755

2,343

26.8%

25.6%

3,556

4,670

16.3%

14.8%

14.3%

9M FY22

9M FY23

9M FY22

9M FY23

9M FY22

9M FY22 (adj)

9M FY23

o BEV Revenue grew by 31% and constitutes

25% of total revenue

o Non-BEV Revenue grew by 20% while light vehicle sales in our top-3 markets (North America, India, and Europe) grew by only 1%

largely due to o EBITDA Margin was lower increase of RM prices in “arithmetic effect” despite material price passthrough) despite positive impact of product mix

(because

o Lower net finance cost has resulted into transmission between

better margin EBITDA and PAT

Notes: 1. 2.

Revenue includes net gain from foreign exchange Excluding exceptional income

Key Ratios

VA/Employee cost

RoCE (%)

RoE (%)

5.1

5.2

5.7

6.4

28.8%

36.1% 32.4% 28.5%

30.4%

34.6% 36.3%

26.6%

Mar-20 Mar-21 Mar-22 Dec-22

Net Debt to EBITDA

Working Capital Turnover

Fixed Asset Turnover

3.9

4.1

4.6

5.0

4.7

3.9

0.76

0.43

(0.01)

(0.12)

Mar-20 Mar-21 Mar-22 Dec-22

Note:

1) 2)

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

ESG Update

We have published our first sustainability report

Our ESG Goals

Environment

Social

Governance

• Providing low carbon

• Maintaining highest

• Zero tolerance for

mobility solutions

• Resource efficiency improvement and management

level of Quality, Health and Safety

corruption

• Becoming an equal opportunity provider

• Zero non-compliance with regulations & laws

• Carbon footprint

• Ensuring social impact

reduction

Linkage to UN Sustainable Development Goals (SDG)

Click on the image to read the report

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.

Our story so far…

Phase - 1

• 18 Customers • 2 Plants • 1 Product

Revenue in INR millions

FY99 – 9MFY23 annualized Avg EBITDA margin 26.2% Revenue CAGR 35.9% Industry CAGR 9.5%

FY99– FY11 Avg. EBITDA margin 21.5% Revenue CAGR 50.6% Industry CAGR 14.6%

Phase - 4

• Started journey as public company

• 68 customers • 9 plants • 15 products

25,755

*9M FY23 Annualized

21,306

19,316

9M FY23

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)

FY12– FY16 Avg. EBITDA margin 25.0% Revenue CAGR 10.6% Industry CAGR 1.7%

FY17– FY22 Avg. EBITDA margin 27.4% Revenue CAGR 34.2% Industry CAGR 1.4%

15,663

12,201

6,992

6,088

5,033

697

910

1,135

1,348

1,174

1,492

2,207

2,807

2,616

3,309

3,456

3,653

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

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)

Vertically-integrated and modular electro-mechanical and autonomous solutions provider for the new EPIC value chain

Customer Mobility Interface Provider

Powertrain Solutions Provider

OEM

Integrated Autonomous Solutions Provider

Electro- mechanical Modules Supplier (SW+HW)

Tier 1 Supplier

Autonomous Modules Supplier (SW+HW)

Radar Boards & Antenna Design Embedded & Application Software

• • • Artificial Intelligence • Machine Learning Algorithms •

Zonal architecture and multi-sensor systems

Electrical & Mechanical Components Supplier

Tier 2-n Supplier

Autonomous Components Supplier

Electric Vehicle Solutions

Traditional Auto Supply Chain

Autonomous Driving

.. or any other radar chip manufacturer

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 OEMs1a

3 of the world’s top 10 CV OEMs1b

7 of the world’s top 10 tractor OEMs1b

Irapuato 1 mn starter motors

India

Location Capacity3

Mexico Location Capacity3

5 of the world’s top 15 EV OEMs1c

4 of the Indian top 15 Indian e-2-Wheeler OEMs1d

10 3

1 8 1

Manufacturing Plant

R&D Centre

Tool & Die Shop

Warehouse

International Sales Office

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

Notes: 1. 2.

Data Source: a) BofA Global Automobiles Report; b) Ricardo Report; c) EV-Volumes; d) Vahan Database; Company Analysis Capacity as of March 2022

Product Summary

Belt Starter Generator

Starter Motor

Differential Bevel Gears

Passenger Vehicles

Starter Motor

Off Highway Vehicles

Differential Assembly

Spiral Bevel Gears

Differential Assembly

Reverse Idler

Portal Axle Gears

Differential Bevel Gears

Starter Motor*

Inter-Axle Gear Set

Coupling/ Sleeves

Differential Bevel Gears

Commercial Vehicles

Epicyclic Geartrain/Gears

* Product under development

Product Summary

Controller

Electric 2-Wheelers

Drive Motor (PMSM)

Traction Motor* (PMSM)

Differential Bevel Gears

Electric Cars

Hub Wheel Motor (BLDC)

Controller*

Drive Motor (PMSM)

Electric 3-Wheelers

Spool Gears

Epicyclic Geartrain

e-Axles

Integrated Motor Controller Module (for Predictive Active Suspension)

Electronically Locking Differential (EDL)

Differential Assembly

* Product under development

Controller

Revenue share from BEV has grown 22x over 4 years, with absolute BEV revenue growth at 36x

Revenue from BEV (%)

BEV Segment Revenue (Rs. mn)

25%

5,042

36x

6,227

*9M FY23 Annualized

19x

14%

1.3%

2.0%

174

234

FY19

FY20

FY21

FY22

9M FY23

FY19

FY20

FY21

FY22

FY23*

2,057

4,670

9M FY23

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%

CY22

7.2%

CY19

2.5%

CY20

3.0%

CY21

4.6%

CY22

4.1%

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

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

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

← All Transcripts SONACOMS Stock Page →

Sona Blw Precision Forgings Limited has informed the Exchange about Investor Presentation

Market Movers