LUMAXINDNSEQ1 FY 2023-24August 11, 2023

Lumax Industries Limited

8,599words
129turns
14analyst exchanges
6executives
Management on call
Anmol Jain
JOINT MANAGING DIRECTOR – LUMAX INDUSTRIES LIMITED
Sanjay Mehta
GROUP CHIEF FINANCIAL
Naval Khanna
HEAD CORPORATE, TAXATION
Ravi Teltia
CHIEF FINANCIAL OFFICER– LUMAX INDUSTRIES LIMITED
Ankit Thakral
CORPORATE FINANCE – LUMAX INDUSTRIES LIMITED
Priyanka Sharma
HEAD CORPORATE
Key numbers — 40 extracted
3%
navigate through challenges better than expected, and the world GDP is expected to grow at around 3% for FY '24. However, the Indian economy is estimated to grow at around 6% to 6.5% at the various
6%
ected to grow at around 3% for FY '24. However, the Indian economy is estimated to grow at around 6% to 6.5% at the various economic reports, positioning the country, as one of the world's fastest e
6.5%
to grow at around 3% for FY '24. However, the Indian economy is estimated to grow at around 6% to 6.5% at the various economic reports, positioning the country, as one of the world's fastest expanding
rs,
rengthening India's appeal, as a favourable hub for international organizations. In the coming years, India is set to emerge, as a more formidable and rapidly evolving force. Talking about the autom
70 billion
country's automotive component manufacturers. The auto component industry recorded a turnover of $70 billion, largely driven by expansion in value-added component and a change in con
INR2,000 crore
he industry growth for the years to come. This is also reflected in our strong order book of over INR2,000 crores that is currently on hand. Now I hand over the call to Mr. Sanjay Mehta, Group CFO at Lumax fo
35%
and financial performance for the Q1, FY '24. The share of LED lighting for the quarter stands at 35% and the conventional lighting at 65%. With increased demand of LED lighting on the back of demand
65%
FY '24. The share of LED lighting for the quarter stands at 35% and the conventional lighting at 65%. With increased demand of LED lighting on the back of demand for more premium segment vehicle, we
29%
d. With respect to segment mix for Q1, as a percentage of revenue, 65% from passenger vehicles, 29% from two-wheelers and 6% from commercial vehicles. With respect to product mix for the Q1, as a p
66%
om commercial vehicles. With respect to product mix for the Q1, as a percentage of total revenue, 66% of revenues from the front lighting, 25% from rear lighting and 9% from others. About financial
25%
roduct mix for the Q1, as a percentage of total revenue, 66% of revenues from the front lighting, 25% from rear lighting and 9% from others. About financial performance, I'm delighted to say that i
9%
percentage of total revenue, 66% of revenues from the front lighting, 25% from rear lighting and 9% from others. About financial performance, I'm delighted to say that in Q1, our company has contin
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Guidance — 20 items
Anmol Jain
opening
“We aim to establish Lumax, as the favored partner and solution provider for the OEM, pioneering top-tier products and technologies across various segments.”
Sanjay Mehta
opening
“With increased demand of LED lighting on the back of demand for more premium segment vehicle, we are confident of higher sale of LED lighting going forward.”
Sanjay Mehta
opening
“The greenfield project at Pune is as per schedule and commercial production is expected to commence in Q2 of the current financial year.”
Anmol Jain
qa
“So we do expect raw materials to slightly become better because there are certain products, which have just hit SOP and the price actualization on those have yet to come from the OEMs.”
Anmol Jain
qa
“And once it does go on stream, there will be additional revenues and the manpower cost as a percentage should get neutralized to more like 12%, 12.5% to revenues.”
Anmol Jain
qa
“My guidance for the full year is that definitely, we will be going back to a double-digit EBITDA and perhaps the meeting or exceeding the FY '20, which was peak EBITDA, which we had reported in terms of the margin.”
Abhishek
qa
“So what would be the next year guidance, especially for the FY '25, will it come down to 26% or it will be the same?”
Abhishek
qa
“And sir, you had a guidance of 20% to 25% kind of the growth in FY '25.”
Abhishek
qa
“So you maintained your guidance for the 25% growth and double-digit EBITDA margin for the FY '24?”
Aashin Modi
qa
“And also how much percentage of this will be from entity?”
Q&A — 14 exchanges
Q
My first question is regarding the margin performance. So...
Management
Q
Just a second. I'll flip to the handset mode...
Management
Q
So my first question on the margin performance basically, this quarter, we have seen a contraction in the margin. So I just wanted to understand what is the reason of the higher employee expenses? And what kind of the margin we are looking for the FY '24?
Anmol Jain
So thank you, Abhishek, first and foremost, your observation is correct. If I compare Q1 of the current fiscal from Q1 of last year, there is a contraction in the margin. There are certain reasons for it, which are specific to one time. Number one, there was a subsidy gain in the last year quarter 1, which is not there in the current quarter. That by itself has pulled down the margin by about 0.7%. Owing to that, there is an increase in raw material consumption if you compare on a year-on-year basis, by about 0.5%, but you see it on a consecutive quarter basis, it is pretty much in line or rat
Q
Sir, my first question is regarding this order book. So we have -- every quarter, we continue to grow our order book and now it's approximately INR2,000 crores. So could you give us some colour on that from which customers is this? And what sort of growth do we see from different customers? And also how much percentage of this will be from entity?
Anmol Jain
So the current order book stands almost close to INR2,200 crores, out of which, I would say that almost 60% to 65% of this would be in the passenger car space, about 30% would be in the two- wheeler and three-wheeler space and about residual left about 5% to 6% would be in the commercial and agro space. This growth is various customers. I would say about 25% of the order book is actually with EV models across four-wheelers and two-wheelers and almost close to 65% to 70% of this order book is actually new business and only about 30% to 35% would be a replacement business. So that's just to give
Q
Yes. Just wanted to know this INR2,200 crores of order book, how it will be spread over next three years means there's ballpark, where start executing from this year onwards and post this year, next year, how will you -- how has the execution be?
Anmol Jain
About 40% to 50% of this order book will come into the current year revenue itself, largely the new platform of Mahindra for which the Chakan plant is being put up, that is one of the most significant contributors in the current year, but 40% to 50% of this order book would come into the revenue this year. Next year, we envisage may be close to around 80% of this order book in total. So 45% would go to 80%, and the balance 100% of this order book will come into FY '26. Okay. And we are looking at our share from Maruti is decreasing over the period of time, and we are not in the -- one of the b
Q
Sir, I have two questions. One on the SL Lumax. The math says that you're making about 8% net margin there. In the past con calls, we used to say because of the equity investment that we have in SL Lumax the margin in that business is low. However, now we are making 8%, which is even higher than what we have been reporting in Lumax Industries. So if you could tell us if there is any change in the arrangement in SL Lumax? And to what extent do you think that these numbers are sustainable? That's the first question. I have one more question, but I'll ask later, once you're done with this answer.
Anmol Jain
Pritesh, thank you very much. I think number one, I've always maintained for SL Lumax, please look at the full year. Current... Sir, I'm looking at the full year itself because even last year was the first year, where we had a P&L associated line of INR40 crores, which has never happened in the past 10 years numbers. So that's why from a full year perspective, if you could tell us? Correct. But if I look at the quarter 1 of last year, we were at 4%. So for the full year, it was 8%. And for the current quarter, it's also 8%. But please understand that servicing one single customer does have its
Q
Sir, my first question, just a clarity. When you talked about double-digit EBITDA margins for FY '24, do you include other income or excluding other income?
Sanjay Mehta
Include other income. It includes other income. Yes. Okay. Secondly, your employee cost for the quarter was about INR76 crores, just wanted to understand that will this run rate continue for the entire year? So as a percentage, my manpower cost was about 13.2% for the quarter, which is much higher than the full year last year, which was at 12.4%. As I mentioned, there has been, of course, certain appraisals and increment and wage agreement impacts compared to the last quarter, which is about maybe 0.5% to 0.6%. More than that, there has been addition of manpower, both at a blue and white colla
Q
I would like to understand from you the road path of our company since we are tracking this company since more than a decade, and we see the growth coming in the company from all the verticals from insourcing, adding a plant then increasing capacity, then insourcing, localizing R&D centres, bringing in new models, electronic Bawal new plant, and now we are spending INR300 crores capex also. So in this -- the whole chain, I would like to understand first is that can you run us through the INR300 crores capex program, including the Pune greenfield and how that will help our company? And what wil
Anmol Jain
Sanjay, I have understood your point. I think, first and foremost, from a technology, I would say, hands down from an R&D engineering strength, Lumax perhaps is the only lighting company, which has the largest R&D strength present both in India and along with our Taiwan and Czech offices. And that's the only reason why we've been able to get a handsome order book all the time because these demands a lot of engineering efforts, a lot of innovation. Coming to your question on the capex, INR300 crores is the estimated capex for the full year, out of which around INR170 crores, INR175 crores by it
Q
Sir, circling back on your margins, you mentioned that the target is to hit double-digit margins. Are we expecting it, say, by end of this year, sir, are we saying this, we want to hit it for the entire year FY '24?
Anmol Jain
So FY '24 for the full year, we would be looking at a double-digit margin at an EBITDA level. Is this now currently looking slightly challenging because you mentioned earlier in the call that with Chakan coming onstream, obviously, there has been some increase in employee expenses, even in Q2, we'll see some of that and full-benefit from Q3 onwards. So the ask for the remaining six months is significantly higher than the 10% to be able to hit the double-digit number. So ma'am, I never said that we will hit it for the year. I think Q2 onwards also, we should be looking at a double-digit number.
Q
My question is on the order book. If I recall, I think last quarter, you had shared a number of about INR1,300 crores, and this quarter, you are sharing a number of about INR2,200 crores. So is it that we have received such a big amount of orders just in this quarter?
Anmol Jain
That's correct, And these orders that -- the order book number that you give out, this is per annum order, right, not like some others give out life cycle order, this is the per annum kind of number that you expect? No, this is the per annum number. We do not give out life cycle numbers. If I do life cycle numbers, it would be significantly higher. But on a per annum, we have a INR2,200 crores order book, and I already gave the bifurcation in how much will come in FY '24, '25 and '26. We do estimate all of this will come in by FY '26 into the revenue stream. Understood. And typically, what we'
Q
Yes. Sir, congratulations on good number, sir. So June quarter being a weaker quarter order still we crossed INR600 crores mark, that is really commendable. And sir, my question is on the debt side. What would be our debt position by, say, end of this fiscal?
Sanjay Mehta
So right now, if I had to take on the June, our long-term debt is around INR122 crores. So we are anticipating because this new plant is coming around, the net debt should be around INR200 crores to INR210 crores. Long and short included? No, no, I'm talking about long term. And if I take the working capital also, the – year-end should be around -- net debt should be around INR500 crores to INR550 crores. INR500 crores to INR550 crores. Okay. Right now, in 30th June, it is INR520 crores. Okay. So it would be at similar level by year-end. Yes. Okay. And sir, as you mentioned that in next two ye
Q
Yes. Sir, I had a question on the greenfield project in Pune. As per the annual report, you're saying that optimum utilization, you should do a revenue of around INR600 crores. Just wanted to know a path this year, maybe in the second half, what could be the run rate of revenue coming from the Pune plant and can you hit the INR600 crores mark next year in FY '25. And as you said, margins from this new plant will be better, so will it be more than 2% EBITDA margin that looking at? And a related question is, will this plan be making only LED products just to get a clarification? Thanks.
Ravi Teltia
So for this year, we are projecting the revenue from this new plant near by around INR190 crores to INR200 crores. And the expected -- and next year is going to touch it to INR500 crores, INR400 crores plus. And the -- as we mentioned in the report also, the overall expectation from this plant is INR1,000 crores in next 3 years down the line. So just to supplement that, I think the INR600 crores would probably the peak revenue would probably come in around FY '26. We do expect maybe anywhere between INR400 crores to INR500 crores coming in FY '25 out of the new facility. The second part of thi
Q
Yes. Just on the Chakan plant. I mean, what is the breakeven level for this plant?
Anmol Jain
So the Chakan specific plant, the breakeven level would be -- I mean, we would break even, we will actually make a profit this year by itself. But are you asking me for the breakeven revenue per month. No, I'm saying from -- yes, I mean, so I think you'll be commissioning this in Q3. So half years of -- you'll have half year of plant running. So at what level, would you be at 30% level as a plant level overall? Will you be at breakeven? What is the percentage level of breakeven? Around 40% is what I reckon. 40% capacity utilization would be a breakeven. Okay. Because on a INR600 crores peak re
Q
Well, I would like to thank everyone for joining on the call, and we continue to remain confident on the growing prospects of India and the auto component sector. I hope we were able to respond to all your queries adequately. For any further information, I request you to please get in touch with SGA, our Investor Relations Advisors. Thank you very much. Have a good day.
Management
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Speaking time
Anmol Jain
43
Moderator
16
Sanjay Mehta
16
Dhruv Bhatia
12
Apurva Mehta
8
Aashin Modi
6
Abhishek
6
Pritesh Chheda
6
Saumil Shah
6
Alisha Mahawla
3
Opening remarks
Anmol Jain
Thank you very much. A very good morning, everyone. I hope everyone is doing well. Along with me on this call today, I have Mr. Sanjay Mehta, Group CFO; Mr. Naval Khanna, Corporate Head Taxation; Mr. Ravi Teltia, CFO; Mr. Ankit Thakral of Corporate Finance; and Ms. Priyanka Sharma, Head Corporate Communications, along with SGA, our Investor Relations Advisors. The results and investor presentation are uploaded on the stock exchange and company's website. I do hope everybody has had an opportunity to go through the same. The world economy managed to navigate through challenges better than expected, and the world GDP is expected to grow at around 3% for FY '24. However, the Indian economy is estimated to grow at around 6% to 6.5% at the various economic reports, positioning the country, as one of the world's fastest expanding economy. The growth can be attributed to targeted initiatives by the government aimed at enhancing transportation, infrastructure, logistics and the overall busines
Sanjay Mehta
Good morning, everyone. I will just take you through the operational and financial performance for the Q1, FY '24. The share of LED lighting for the quarter stands at 35% and the conventional lighting at 65%. With increased demand of LED lighting on the back of demand for more premium segment vehicle, we are confident of higher sale of LED lighting going forward. With respect to segment mix for Q1, as a percentage of revenue, 65% from passenger vehicles, 29% from two-wheelers and 6% from commercial vehicles. With respect to product mix for the Q1, as a percentage of total revenue, 66% of revenues from the front lighting, 25% from rear lighting and 9% from others. About financial performance, I'm delighted to say that in Q1, our company has continued its strong performance with quarterly revenue standing at INR618 crores, depicting a growth of 21% on Y-o-Y basis. Revenue for Q1, FY '24 for our manufacturing business has grown by 16%. The company reported consolidated EBITDA of INR54 cro
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