Federal-Mogul Goetze (India) LtdQ2 FY22
Federal-Mogul Goetze (India) Ltd Q2 FY22 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Price: ₹488P/E: 13.9Market Cap: ₹2.6K CrSector: Auto Components
Management growth scorecard
Revenue
Category 3
Margin
Category 3
Fundraise
N/A
Order
N/A
Capex
Yes
1 of 3 growth signals are positive — mixed outlook.
Full analysisRevenue guidance
Category 3- →Company achieved 90%-95% capacity utilization in Q1 (Jan-Mar 2021), indicating strong current operations.
- →Expecting substantial growth in domestic market during 2021-22 despite COVID impacts.
- →Expansion underway, with CAPEX planned for capacity enhancement, mainly directed towards exports.
- →Export share currently 14%, aiming to increase significantly with more Euro VI compliant programs and global engine platforms.
- →Mid- to long-term plans unchanged despite short-term COVID disruptions; growth driven by OEM market positioning and new global platforms.
- →Future CAPEX expected to be higher than the prior year but carefully managed; not expected to jump to Rs. 5 billion immediately, spread over multiple years.
- →Sustainable EBITDA margin targeted around mid-double digits (14%-15%), assuming normal market conditions post-COVID.
- →Focused on localization to reduce dependence on imports, while maintaining global support for spikes in market demand.
- →Growth driven by technology upgradation, heavy load and turbo engines, and hybrid vehicle production.
Margin guidance
Category 3- →**Sustainable EBITDA Margin:** Management expects a mid-double-digit sustainable EBITDA margin in the range of 14-15% under normal market conditions (Manish Chadha, Page 16).
- →**Capacity Utilization:** Currently operating at 90-95% capacity, with planned capacity enhancements targeting export growth and technology upgrades (Pages 15-16).
- →**Revenue Growth:** Anticipated growth driven by global platform ties and export expansion, although exact peak revenue without CAPEX is uncertain (Page 16).
- →**CAPEX Plans:** Moderate CAPEX planned over next 1-2 years focused on capacity expansion and technology upgrades, but no large immediate CAPEX > Rs. 5 billion expected (Pages 14-16).
- →**Dividend Policy:** Review of dividend payout likely once current investment cycle completes, balancing cash conservation for growth (Pages 11, 16).
- →**Earnings Impact:** Excluding exceptional items, EPS showed positive growth and operational profitability improving over last year despite COVID impacts (Pages 7,16).
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Fundraise plans
- →The company is not currently planning a large new fundraising through debt or equity.
- →They have sufficient cash on hand (~Rs. 1.3 billion) and expect to generate approximately Rs. 2.5 billion in cash flow over the next one to two years.
- →CAPEX plans are focused on capacity enhancement and technology upgradation but are moderate, not expecting Rs. 5 billion immediately (possibly spread over three years).
- →Management emphasized cautious spending of cash, focusing on payback and balanced CAPEX.
- →There is no mention of immediate equity fundraising.
- →Dividend policy review is anticipated once the current investment cycle completes.
- →The company aims to remain cash positive to support growth and global customer sustainability needs.
Order book
- →The transcript does not explicitly mention specific details about the current or expected order book or pending orders for Federal-Mogul Goetze (India) Limited.
- →However, it does indicate optimism about growth opportunities driven by technology upgradation, capacity expansion, and increased export focus.
- →The company is engaging with global customers and OEMs, especially regarding future engine developments and hybrid vehicle components.
- →The capacity utilization has been high (90-95% in January-March quarter) with plans for capacity enhancement and export growth.
- →The management is cautiously planning CAPEX to meet potential demand spikes but is not committing to very large immediate capital expenditure.
- →They also have global support and contingency plans to manage demand spikes without major investment short-term.
- →Overall, the outlook suggests a pipeline of orders consistent with market growth and technological shifts but no quantifiable order book figures are shared.
Capex plans
Yes- →CAPEX for capacity enhancement planned for current and next year, focusing mainly on export growth.
- →Last year's CAPEX was around Rs. 47 crores for capacity enhancement and plant modernization.
- →This year's CAPEX expected to be significantly more than last year's but not a large jump like Rs. 5 billion immediately.
- →Future CAPEX will also target technology upgradation, including heavy load and turbo engine products.
- →CAPEX spread over one to two years; no immediate large spend, but incremental investments aligned with market growth.
- →Working capital will also increase alongside CAPEX for capacity expansion.
- →Global support capacity available (Turkey, Poland) acts as backup for any sudden market spikes.
- →Dividend policy to be reviewed post completion of this investment cycle.
How does Federal-Mogul Goetze (India) Ltd rank vs peers in Auto Components?
Pro feature1Federal-Mogul Goetze (India) Ltd
Rev 3Mar 3
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