SONACOMSNSE3 May 2023

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

Sona BLW Precision Forgings Limited

Q4 & FY23 Earnings Presentation

03 May 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

Q4 FY23 Financial Performance Highlights

7,440 mn | 35%

2,014 mn | 49%

1,198 mn | 54%

Revenue | YoY Growth

EBITDA | YoY Growth

PAT | YoY Growth1

27.1% EBITDA Margin

16.1% PAT Margin

2,037 mn | 37%

BEV Revenue | YoY Growth

28% Q4 FY23 Revenue Share

from BEV

Notes: 1.

Excluding exceptional income of Q4 FY22

FY23 Financial Performance Highlights

26,756 mn | 26%

6,958 mn | 25%

3,953 mn | 28%

Revenue | YoY Growth

EBITDA | YoY Growth

PAT | YoY Growth1

26.0% EBITDA Margin

14.8% PAT Margin

30.4%

RoCE2

26.6%

RoE3

Notes: 1. 2. 3.

Excluding exceptional income of FY22 ROCE = LTM EBIT/ Average tangible capital employed ROE = LTM PAT/ Average tangible net worth

Rising against the Tide

26%

26,756

CAGR: 30%

36%

21,306

28%

15,663

85.29

12,201

83.15

-3%

79.91

79.22

-1%

-4%

CAGR: -2%

FY20

FY21

FY22

FY23

Global light vehicle sales volume (mn)

Sona Comstar Revenue (Rs. mn)

Data source for global light vehicle sales: Nomura Global Autos Monthly

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%

26%

14%

1.3x

5,042

6,707

3.3x

2,057

2.8x

1.4x

FY21

FY22

FY23

FY21

FY22

FY23

FY21

FY22

FY23

Revenue Share from BEV

BEV segment revenue

Cumulative No. of EV Programs

41 (10+9+22)1

EV Programs1 awarded across

25 customers as at the end of

Q3 FY23

awarded

42 (10+10+22)1

EV Programs1 awarded across

26 customers as at the end of

Q4 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 fully ramped up production + # of programs in ramp-up + # of programs not yet in production)

This new order win strengthens our presence in Electric CVs, with new products and increased revenue potential

Final Drive Differential + Intermediate Gears + Input/Rotor Shaft

For Class 4 Electric CV

North American New Age OEM of CV

₹ 5,010 mn

addition in our orderbook

Q4 FY24

SOP Year

Our journey of increase in revenue potential per electric vehicle

42 EV programs across 261 different customers

North America 5 Customers 3 12

Europe2 5 Customers 1 5

6 2

No. of programs customers

22 10

Programs in fully ramped-up production

Programs in ramp-up or not yet in production

Programs for geartrain components

Programs for traction motors, IMCM and PHEV starters

Programs for e-Axle

Asia 4 Customers 2 2 3 1

India 15 Customers 4 7

15 9

+x denotes the change during Q4 FY23

Notes: 1. 2.

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

Our Strategic Priorities

Electrification

Global Market Significance

Diversification

Technology

Orders worth Rs. 80 bn were added to our orderbook during FY23

115

166

Programs won in FY23

New customers added in FY23

Global Market Share of Differential Gears1

6.3%

7.2%

CY21

CY22

Global Market Share of Starter Motors1

4.6%

4.1%

CY21

CY22

Non-EV

Notes: 1.

As per Ricardo’s market size estimates; starter motor market share is across light vehicles report

EV contributes 77% to our net order book1 of ₹215 billion (8x FY23 revenue)

238 bn

Orderbook at the end of Q3 FY23

# of Programs

# of Customers

28 bn

Orders consumed from matured and ramp-up programs during Q4 FY23

EV Rs. 166 Billion (77%)

66% 17 8

5 bn

Orders added for programs won in Q4 FY23

215 bn

Orderbook at the end of Q4 FY23

Non-EV Rs. 49 Billion (23%)

8% 10 9

3% 5 5

8% 28 12

9% 22 8

6% 43 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.

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 15% in FY23

FY20

FY21

FY22

FY23

29%

42%

27%

14%

27%

34%

25%

26%

31%

18%

26%

21%

38%

15%

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%

4% 1%

26%

23%

20%

43%

15%

FY23

29%

32%

FY23

21%

By Vehicle segment

FY22

68%

16%

15%

1.5%

OHV

E2W/E3W

FY23

69%

15%

12%

Our Strategic Priorities

Electrification

Global Market Significance

Diversification

Technology

We introduced 4 new products to the market in FY23

Autonomous /Connected

Electric

GaN Inverter

Integrated Controller with DC-DC Converter

Liquid Cooled Inverter

High Voltage Inverter

Motors for Bots and Industrial Automation

Magnet-free Motors, EMSM and SRM designs

High Voltage Traction Motors

Integrated P4 e-Axle

ADAS Sensors

Predictive Active Suspension Integrated Motor Controller Module

Low Voltage Inverter

Mid-mount Drive Motor (PMSM)

Hub Wheel Motor (BLDC)

Belt-driven Starter Generator (BSG)

Independent suspension e-Axle

Input/Rotor Shaft

Intermediate Gears

Axial Flux Motors

Reduction Drive Unit

Rigid e-Axle

Net Spiral Bevel Gears

EDL

Park Gear

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

Diff Gears

Starter Motors

Diff Assembly

Spool Gear

Epicyclic Set

Active Biased Differential

Q4 & FY23 Financial Update

Our final drive gears

EBITDA (Rs. mn)

EBITDA Margin (%)

PAT (Rs. mn)

PAT Margin (%)

Q4 FY23 Financials

1 Revenue (Rs. mn)

BEV

YoY: 35%

7,440

5,500

1,486

2,037

YoY: 49%

2,014

1,354

24.6%

27.1%

Q4 FY22

Q4 FY23

Q4 FY22

Q4 FY23

o Highest ever BEV revenue o Up 37% YoY o 28% of total sales

o Non-BEV Revenue grew by a robust 35% while light vehicle sales in our top-3 markets (North America, India, and Europe) grew by 11%

o EBITDA Margin is higher by ~2.5% largely due to positive impact from operating leverage and product mix

YoY: 14%

1,047

1,198

YoY: 57%

1,223

778

19.0%

16.1%

14.1%

16.4%

Q4 FY22 Q4 FY23 Q4 FY22 2

(adj)

Q4 FY23 (adj)

o Lower net finance cost and depreciation (as % of revenue) has resulted into better margin transmission between EBITDA and adjusted PAT

o PAT

for Q4FY23

is expenses

adjusted related

exceptional diligence work for acquisition

for to

Notes: 1. 2.

Revenue includes net gain from foreign exchange Adjusted PAT as shown on page no. 22 of Q4 FY22 earnings presentation

o PAT for Q4FY22 is adjusted for one time

tax impact

FY23 Financials

1 Revenue (Rs. mn)

BEV

YoY: 26%

26,756

21,306

5,042

FY22

6,707

FY23

EBITDA (Rs. mn)

EBITDA Margin (%)

PAT (Rs. mn)

PAT Margin (%)

YoY: 25%

6,958

5,591

26.2%

26.0%

YoY: 9%

3,615

3,953

YoY: 29%

3,978

3,088

17.0%

14.8%

14.5%

14.9%

FY22

FY23

FY22

FY23

2 FY22 (adj) FY23 (adj)

o BEV Revenue grew by 33% and constitutes

26% of total revenue

o Non-BEV Revenue grew by 23% while light vehicle sales in our top-3 markets (North America, India, and Europe) grew by only 2%

o EBITDA Margin was lower by ~0.2% despite positive impact of product mix and operating leverage, largely due to increase in RM prices (because of “arithmetic effect” despite material price passthrough)

Notes: 1. 2.

Revenue includes net gain from foreign exchange Adjusted PAT as shown on page no. 23 of Q4 FY22 earnings presentation

o Lower net finance cost has resulted into transmission between

better margin EBITDA and adjusted PAT

o PAT for FY23 is adjusted for exceptional expenses related to diligence work for acquisition

o PAT for FY22 is adjusted for one time tax

impact and IPO expense reversal

FCFO of INR 1,996 mn in FY23

Numbers in Rs. mn

Free Cash Flow from Operations: INR 1,996 mn

Opening Cash as on 1st April 2022

Net Cash Flow from Operations

Capex

Other Cash Deployments

Closing Cash as on 31st March 2023

EBITDA

∆ Working capital

6,958

(812)

Tax paid

(1102)

Others

303

Investments

(2,287)

Net loan drawdown

1,471

Dividend

(1,199)

Others

(76)

Key Ratios

VA/Employee cost

RoCE (%)

RoE (%)

5.1

5.2

5.7

6.4

28.8%

36.1% 32.4% 30.4%

30.4%

34.6% 36.3%

26.6%

Mar-20 Mar-21 Mar-22 Mar-23

Net Debt to EBITDA

Working Capital Turnover

Fixed Asset Turnover

3.9

4.2

4.6

5.0

4.7

3.9

0.76

0.43

(0.01)

(0.12)

Mar-20 Mar-21 Mar-22 Mar-23

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 implemented an innovative solution to reduce waste disposal by 75% and recycle 12,000 liters of water per day

Previous Process

Implementation of Zero Liquid Discharge Treatment Process

Die Lubricant (Graphite + Demineralized Water)

Die Lubricant (Graphite + Rejuvenated Demineralized Water)

Rejuvenated Water: saving of 12,000 liters/day

Forging Process

Used Die Lubricant 16,000 liters/day

Filtration

Filtration of oil through Ultra-filtration (UF) & Reverse Osmosis (RO)

Skimming

Separating out oil from the mixture

Squeezing

Treatment with Poly Electrolyte for flakes formation

Flash Mixer

Treatment with Alum & Lime for PH control

Disposed through authorized channel

Sent for Treatment Process

Equalization

To keep the solids suspended in the mixture

Note: Anyone who wishes to implement this system in their forging plant may reach out to us. We will be delighted to share this knowledge for the benefit of the environment

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 – FY23 Avg EBITDA margin 26.3% Revenue CAGR 36.1% Industry CAGR 9.6%

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

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

• 68 customers • 9 plants • 17 products

26,756

21,306

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

FY17– FY23 Avg. EBITDA margin 27.0% Revenue CAGR 32.9% Industry CAGR 4.9%

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

34.5%

Growth

5-year Revenue

CAGR

Vitality

Integrity

Frugality

26.8%

Margins

5-year Avg.

EBITDA

>25%

Returns ROE

Each Year

(FY19-FY23)

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

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

Germany

Cologne

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

9 3

1 8

Manufacturing Plant

R&D Centre

Tool & Die Shop

Warehouse

Gurugram 44.6 mn gears

Manesar

2.0 mn differential assemblies

Pune

11.8 mn gears

Chennai

3.8 mn starter motors 0.4 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 2023

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

Electric Cars

Electronically Locking Differential (EDL)

7 5 6

Epicyclic Geartrain

Spool Gears

Integrated Motor Controller Module (for Predictive Active Suspension)

Traction Motor*

Differential Assembly

Electric Commercial Vehicles

Intermediate Gears

Controller*

Differential Bevel Gears

4 5

Electric 2-Wheelers

Hub Wheel Motor

Electric 3-Wheelers

Drive Motor

Controller

1 2

* Product under development

Input/Rotor Shaft

e-Axles

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

Intermediate Gears & Input/Rotor Shaft

Differential gears

SRM Motor

Controllers

E-Axles

Drive Motors

Hub-wheel Motors

In serial production or in orderbook

To be added between CY23-25

Revenue share from BEV has grown 20x over 4 years, with absolute BEV revenue growth at 39x

Revenue from BEV (%)

BEV Segment Revenue (Rs. mn)

20x

14%

1.3%

2.0%

25%

26%

5,042

39x

6,707

2,057

174

234

FY19

FY20

FY21

FY22

FY23

FY19

FY20

FY21

FY22

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