Alicon Castalloy LtdQ1 FY23Auto Components

Alicon Castalloy Ltd

Q1 FY23 Earnings Call Analysis

Management growth scorecard

Revenue

Category 3

Margin

Category 1

Fundraise

Order

Yes

Capex

2 of 5 growth signals are positive.

Revenue guidance

Category 3

→Targeting 15% top-line growth for FY 2023-24 based on revised customer schedules and new orders.
→Confident to achieve INR 2,000 crores revenue by FY 2025-26, with around 84-85% orders already secured.
→Anticipated CAGR growth of ~18%-20% over the next five years.
→Expect more than 90% hit rate on converting orders to actual sales.
→Shift in sales mix from 2-Wheelers to Passenger Vehicles and Commercial Vehicles to improve margins and growth.
→Increasing global market exposure, aiming to raise export revenue from 22% to about 40%-42% by FY 2025-26.
→Volume growth expected from global clients like JLR and Volkswagen, supported by easing supply chain issues.
→Focus on high-margin segments including EV parts (33% contribution), structural parts, and carbon-neutral technologies.

Category 1

→Targeting revenue growth to over INR 2,000 crores by FY 2025-26, representing around 15%-20% CAGR over five years (Page 12, 26).
→EBITDA margin is expected to improve from an average of ~10.5% to around 14% by FY 2025-26 due to richer product mix, new order wins, and cost efficiencies (Pages 25, 26, 12, 6).
→Confident about achieving minimum 1% EBITDA margin growth annually, reflecting improved operational performance (Page 19).
→Business growth driven by secured orders comprising around 84% of target portfolio for FY 25-26, with the balance coming from new business inquiries (Page 12).
→Profit after tax growth was strong in FY '23 (+113% YoY), indicating improving profitability trends (Page 4).
→Focus on enhancing margins, return ratios and optimizing working capital to support healthy earnings growth (Page 6).

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→There is no explicit mention of any current or planned new fundraising through debt or equity in the discussed content.
→The management indicates confidence in reducing debt by the end of the current fiscal year based on budgeted cash flow planning.
→Working capital increase is noted due to top-line growth and capital debtors, with expectations to realize receivables within 6-8 months.
→Capex for FY '24 is approximately INR 90 crores, mostly for maintenance and machining, funded through internal cash flows without mention of external fundraising.
→Emphasis is on improving operational efficiency, margins, and leveraging existing facilities rather than greenfield investments needing large upfront capital.
→Overall, the company appears focused on organic growth and managing working capital without indicating new debt or equity raisings imminently.

Yes

→Current order book stands at approximately INR 2,000 crores, with around 85% already confirmed with orders.
→New orders under discussion could add around INR 300 crores.
→Long-term opportunity to book INR 7,800 crores of sales over the next seven years.
→About 50% of the current order book is from global business.
→Anticipated conversion ratio of order book to sales revenue is over 90%.
→Lead times vary by customer, generally one to two years depending on vehicle launch schedules.
→Growth expectations include 15% revenue growth in FY '24 and a CAGR of around 18%-20% over the next five years.
→Order book execution majorly expected in FY 2025-26.
→New part additions and expansion in passenger/commercial vehicle segments expected to further grow the order book.

→No current plans for greenfield capex; focus remains on expanding/improving capacity at existing facilities (Page 27).
→Planned delivery for FY 2025-26 (INR 2,000 crores revenue) is expected from existing facilities without new greenfield investments (Page 27).
→Maintenance and machining capex continues, supporting new customers and quality requirements (Page 17).
→Capex of INR 90 crores planned for FY 2024, primarily for maintenance and capacity utilization improvements (Page 6).
→New investments in technology and automation, including captive solar plant equity (INR 55 crores), 3D printing, friction stir welding, and EV segment innovations for competitive differentiation (Page 11).
→Strategic focus on increasing capacity utilization via operational improvements (more cavities, heavier parts) rather than major new facility investments (Page 26).
→No immediate greenfield project investment; location search and investment could take 3-4 years if pursued in future (Page 27).

How does Alicon Castalloy Ltd rank vs peers in Auto Components?

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1Alicon Castalloy Ltd

Rev 3Mar 1

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